nep-spo 2013-07-05 papers

on Sports and Economics

Issue of 2013‒07‒05
one paper chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

What Causes the Favorite-Longshot Bias? Further Evidence from Tennis By Lahvicka, Jiri

What Causes the Favorite-Longshot Bias? Further Evidence from Tennis

By:	Lahvicka, Jiri
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.
Keywords:	favorite-longshot bias; tennis; sports betting; market efficiency
JEL:	G14 L83
Date:	2013–06–30
URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:47905&r=spo

This nep-spo issue is ©2013 by Joao Carlos Correia Leitao. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.

General information on the NEP project can be found at http://nep.repec.org. For comments please write to the director of NEP, Marco Novarese at <director@nep.repec.org>. Put “NEP” in the subject, otherwise your mail may be rejected.

NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.