The Favourite‐Longshot Bias, Bookmaker Margins and Insider Trading in a Variety of Betting Markets | Zendy

Cain Michael | Zendy; Law David | Zendy; Peel David | Zendy

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The Favourite‐Longshot Bias, Bookmaker Margins and Insider Trading in a Variety of Betting Markets

Author(s) -

Cain Michael,

Law David,

Peel David

Publication year - 2003

Publication title -

bulletin of economic research

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.227

H-Index - 29

eISSN - 1467-8586

pISSN - 0307-3378

DOI - 10.1111/1467-8586.00174

Subject(s) - odds , insider , economics , competitor analysis , variety (cybernetics) , financial economics , market efficiency , econometrics , statistics , mathematics , logistic regression , management , political science , law

This paper verifies the existence of the favourite‐longshot bias in a variety of sports betting markets where odds are set by bookmakers, but the precise pattern of the bias is not identical. Evidence is found to support a central prediction of the Shin (1993) model, which asserts that bookmakers are impelled to create a bias in their odds because of the presence of insider traders: that margins increase with the number of competitors.

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