| Abstract: |
In sports betting markets, bets on favorites tend to have a higher expected
value than bets on longshots. This article uses a data set of almost 45,000
professional single tennis matches to show that the favorite-longshot bias is
much stronger in matches between lower-ranked players, in later-round matches,
and in high-profile tournaments. These results cannot be solely explained by
bettors being locally risk-loving or overestimating chances of longshots, but
are consistent with bookmakers protecting themselves against both better
informed insiders and the general public exploiting new information. |