Price movements and the prevalence of informed traders: The case of line movement in college basketball

Kevin Krieger and Andy Fodor

Journal of Economics and Business, 2013, vol. 68, issue C, 70-82

Abstract: Recent research has hypothesized that a higher concentration of informed traders in a market implies that prices are more efficient. A reasonable next question is whether large price movements in markets with a relatively more informed clientele are more indicative of information realization. We find line movements in college basketball games of relatively low profile, denoted by the lack of a “power conference” team in the contest, are significantly more likely to be the result of information realization. This confirms that substantial price changes in markets with fewer ordinary traders are more (less) likely indicative of information flow (noise).

Keywords: Sports gambling; Line movement; Price changes (search for similar items in EconPapers)
JEL-codes: D8 G1 L8 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:68:y:2013:i:c:p:70-82

DOI: 10.1016/j.jeconbus.2013.04.002

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