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Sentiment Bias in National Basketball Association Betting

Author

Listed:
  • Arne Feddersen

    (University of Southern Denmark, Department of Environmental and Business Economics)

  • Brad Humphreys

    (West Virginia University, College of Business and Economics)

  • Brian Soebbing

    (Louisiana State University, School of Kinesiology)

Abstract

We develop evidence of bettors with sentiment bias in the betting market on National Basketball Association (NBA) games. We use novel measures of team popularity, arena capacity-utilization and team all star votes received, as proxies for the presence of biased investors. Analysis of point spreads and bet outcomes for more than 33,000 NBA games played in 1981-2012 shows that bookmakers offer favorable point spreads on games involving popular teams, an outcome consistent with sentiment bias. These favorable point spreads do not translate into higher returns for informed bettors, suggesting that bookmakers shade point spreads to increase their profits.

Suggested Citation

  • Arne Feddersen & Brad Humphreys & Brian Soebbing, 2013. "Sentiment Bias in National Basketball Association Betting," Working Papers 13-03, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:13-03
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    Citations

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    Cited by:

    1. Oliver Merz & Raphael Flepp & Egon Franck, 2019. "Does sentiment harm market efficiency? An empirical analysis using a betting exchange setting," Working Papers 381, University of Zurich, Department of Business Administration (IBW).
    2. Li, Yongjun & Wang, Lizheng & Li, Feng, 2021. "A data-driven prediction approach for sports team performance and its application to National Basketball Association," Omega, Elsevier, vol. 98(C).
    3. Arne Feddersen & Brad R. Humphreys & Brian P. Soebbing, 2017. "Sentiment Bias And Asset Prices: Evidence From Sports Betting Markets And Social Media," Economic Inquiry, Western Economic Association International, vol. 55(2), pages 1119-1129, April.
    4. Benjamin Waggoner & Daniel Wines & Brian P. Soebbing & Chad S. Seifried & Jean Michael Martinez, 2014. "“Hot Hand” in the National Basketball Association Point Spread Betting Market: A 34-Year Analysis," IJFS, MDPI, vol. 2(4), pages 1-12, November.
    5. Alexander J. Cardazzi & Brad R. Humphreys & Bryan McCannon & Zachary Rodriguez, 2020. "Blaming The Ref: Understanding the Effect of Unexpected Emotional Cues on Family Violence," Working Papers 20-11, Department of Economics, West Virginia University.
    6. Igan, Deniz & Pinheiro, Marcelo & Smith, John, 2015. "A study of a market anomaly: “White Men Can’t Jump”, but would you bet on it?," Journal of Economic Behavior & Organization, Elsevier, vol. 113(C), pages 13-25.
    7. repec:cup:judgdm:v:12:y:2017:i:2:p:168-172 is not listed on IDEAS
    8. Rostislav Staněk, 2017. "Home bias in sport betting: Evidence from Czech betting market," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 12(2), pages 168-172, March.

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    More about this item

    Keywords

    sentiment bias; sports betting; NBA;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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