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THE “LARGE-FIRM” EFFECT? BETTOR PREFERENCES AND MARKET PRICES IN NCAA FOOTBALL

Rodney Paul, Andrew Weinbach and Eric Higger

Journal of Prediction Markets, 2013, vol. 7, issue 2, 29-41

Abstract: NCAA football has a clear classification of “large” (AQ) and “small” (non-AQ) conferences. This setting lends itself to the testing of the “small-firm” effect found in financial markets in the college football betting market. The “small-firm” effect occurs when small cap firms outperform large cap firms; typically attributed to difficulty and costs in finding information on small firms. In college football, AQ-teams win more than implied by efficiency against non-AQ teams. At the same time, AQ teams receive a disproportionate share of bets on these games. The likely rationale behind these findings is the incentives created by the BCS system which leads the point spread to not be a true random variable within this market.

Keywords: Efficient Markets; Betting Markets; Behavioral Finance (search for similar items in EconPapers)
JEL-codes: L83 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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