EconPapers    
Economics at your fingertips  
 

Hidden Power of Trading Activity: The FLB in Tennis Betting Exchanges

Isabel Abinzano (), Luis Muga and Rafael Santamaria

Journal of Sports Economics, 2019, vol. 20, issue 2, 261-285

Abstract: This article examines the impact of trading activity on the favorite–long shot bias (FLB) in tennis betting exchanges, using direct measures such as betting volume, average bet, and standard deviation of the odds. According to predictions based on disagreement models, odds mispricing is positively associated with trading volume but negatively associated with the presence of institutional bettors. The FLB is also positively related to the degree of uncertainty in the market. The existence of two simultaneous markets (a “main†and an “alternative†market) in this specific sports-betting environment has enabled us to observe that the relative amount of attention given to the favorite versus that given to the long shot is positively associated with the FLB. Finally, information is more rapidly incorporated into the odds in the market that receives more attention from bettors, an effect that is intensified by the arbitrage and hedging that occurs between the two markets.

Keywords: betting exchanges; trading activity; favorite long-shot bias; behavioral finance (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/1527002517731875 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:jospec:v:20:y:2019:i:2:p:261-285

DOI: 10.1177/1527002517731875

Access Statistics for this article

More articles in Journal of Sports Economics
Bibliographic data for series maintained by SAGE Publications ().

 
Page updated 2022-09-10
Handle: RePEc:sae:jospec:v:20:y:2019:i:2:p:261-285