Testing the efficiency of the National Football League betting market

Boulier, Bryan L.; Stekler, H. O.; Amundson, Sarah

doi:10.1080/00036840500368904

Cited by 28 publications

(17 citation statements)

References 8 publications

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“…In contrast, tipsters' forecasts are poor, in support of the results of previous studies (Forrest and Simmons, 2000). Our fi ndings also support results cited by, among others, Forrest et al (2005), Boulier et al (2006) and Spann and Skiera (2003), who show that betting odds and prediction markets provide very good forecasts. These previous studies do not, however, compare the forecasting accuracy of those methods and tipsters, whereas we show that PMs and betting odds forecast equally well and both clearly outperform tipsters.…”

Section: Accuracy Of Weighting-based Combined Forecastssupporting

confidence: 91%

Sports forecasting: a comparison of the forecast accuracy of prediction markets, betting odds and tipsters

Spann

Skiera

2008

Journal of Forecasting

160

108

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This article compares the forecast accuracy of different methods, namely prediction markets, tipsters and betting odds, and assesses the ability of prediction markets and tipsters to generate profits systematically in a betting market. We present the results of an empirical study that uses data from 678-837 games of three seasons of the German premier soccer league. Prediction markets and betting odds perform equally well in terms of forecasting accuracy, but both methods strongly outperform tipsters. A weighting-based combination of the forecasts of these methods leads to a slightly higher forecast accuracy, whereas a rule-based combination improves forecast accuracy substantially. However, none of the forecasts leads to systematic monetary gains in betting markets because of the high fees (25%) charged by the state-owned bookmaker in Germany. Lower fees (e.g., approximately 12% or 0%) would provide systematic profits if punters exploited the information from prediction markets and bet only on a selected number of games. Copyright © 2008 John Wiley & Sons, Ltd.

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Section: Accuracy Of Weighting-based Combined Forecastssupporting

confidence: 91%

Sports forecasting: a comparison of the forecast accuracy of prediction markets, betting odds and tipsters

Spann

Skiera

2008

Journal of Forecasting

160

108

View full text Add to dashboard Cite

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“…As there is no objectively true value for each outcome’s probability, we used probabilities implied in the betting odds provided by sports-betting providers as a benchmark (calculated as the normalized inverse of the provided odds; for details, see the Supplemental Material ) and computed the absolute deviation from this benchmark as our measure of judgment accuracy. Betting odds are among the best available predictors for sport events (e.g., Boulier, Stekler, & Amundson, 2006 ; Spann & Skiera, 2009 ). They thus constitute an upper bound for judgment accuracy of individuals without very specific expert knowledge, making them an adequate benchmark for the quality of crowd judgments (e.g., Herzog & Hertwig, 2011 ; Palley & Soll, 2019 ).…”

Section: Studymentioning

confidence: 99%

Enhancing the Wisdom of the Crowd With Cognitive-Process Diversity: The Benefits of Aggregating Intuitive and Analytical Judgments

Keck

Tang

2020

Psychol Sci

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Drawing on dual-process theory, we suggest that the benefits that arise from combining several quantitative individual judgments will be heightened when these judgments are based on different cognitive processes. We tested this hypothesis in three experimental studies in which participants provided estimates for the dates of different historical events (Study 1, N = 152), made probabilistic forecasts for the outcomes of soccer games (Study 2, N = 98), and estimated the weight of individuals on the basis of a photograph (Study 3, N = 3,695). For each of these tasks, participants were prompted to make judgments relying on an analytical process, on their intuition, or (in a control condition) on no specific instructions. Across all three studies, our results show that an aggregation of intuitive and analytical judgments provides more accurate estimates than any other aggregation procedure and that this advantage increases with the number of aggregated judgments.

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“…Finally, an extensive literature focuses on the efficiency of betting markets by testing the rationality of market participants' in forecasting (Gray and Gray, 1997;Boulier, et al, 2006).…”

Section: Testing Rational Expectations: a Brief Literature Reviewmentioning

confidence: 99%

Efficiency and formation of expectations: evidence from the European investment survey

Δράκος¹

2008

Applied Economics

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The European Commission conducts an annual survey regarding planned and realized business fixed investment across various manufacturing sectors in Euroland. In this study we investigate the predictive content of survey-based expectations on investment. In addition, we empirically test the rationality of respondents both in a time series as well as in a panel context. According to our results, based on pooling the data, efficiency is rejected since expectations are biased predictors of actual outcomes. Furthermore, expectations revisions are found to be correlated with components of the information set known at the time of decision making. Finally, our results qualify regressive expectations as the mechanism that more adequately describes the formation of expectations.

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Testing the efficiency of the National Football League betting market

Cited by 28 publications

References 8 publications

Sports forecasting: a comparison of the forecast accuracy of prediction markets, betting odds and tipsters

Sports forecasting: a comparison of the forecast accuracy of prediction markets, betting odds and tipsters

Enhancing the Wisdom of the Crowd With Cognitive-Process Diversity: The Benefits of Aggregating Intuitive and Analytical Judgments

Efficiency and formation of expectations: evidence from the European investment survey

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