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Information, prices and efficiency in an online betting market

Elaad, G., Reade, J. and Singleton, C. (2019) Information, prices and efficiency in an online betting market. Finance Research Letters. ISSN 1544-6123 (In Press)

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To link to this item DOI: 10.1016/j.frl.2019.09.006

Abstract/Summary

We contribute to the discussion on betting market efficiency by studying the odds (or prices) set by fifty-one online bookmakers, for the result outcomes in over 16,000 association football matches in England since 2010. Adapting a methodology typically used to evaluate forecast efficiency, we test the Efficient Market Hypothesis in this context. We find odds are generally not biased when compared against actual match outcomes, both in terms of favourite-longshot or outcome types. But individual bookmakers are not efficient. Their own odds do not appear to use fully the information contained in their competitors' odds.

Item Type:Article
Refereed:Yes
Divisions:Faculty of Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
ID Code:86111
Uncontrolled Keywords:prediction markets, Efficient Market Hypothesis, favourite-longshot bias, forecast efficiency
Publisher:Elsevier

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