Journal of Economics and Finance

, Volume 40, Issue 3, pp 538–548 | Cite as

Additional evidence of heuristic-based inefficiency in season wins total betting markets: Major League Baseball

Article

Abstract

The large majority of sports betting papers have addressed questions of market efficiency based on the outcome of single game, such as spread (sides) or point totals wagers. This research examines the Major League Baseball (MLB) season wins total over/under betting market with respect to questions of market efficiency and profitability. Woodland and Woodland (2013, 2015) investigated the season wins total markets for the National Football League (NFL) and the National Basketball Association (NBA) and found significant inefficiencies. Betting rules tested in this paper parallel those proposed by Woodland and Woodland for the NFL and NBA. They aim to take advantage of the implications of the representativeness heuristic, that is, individuals expect results from a small number of games to generalize to the entire population. The MLB market is found to be inefficient, and provides opportunities for profitable wagering. We establish a tendency for bettors to overreact to a team’s performance in the previous season, particularly for teams with winning records. Results are consistent with the findings for the NFL and NBA season wins totals betting markets. This may be the consequence of monetary betting limits and a structure requiring the completion of a sport’s season before the bet outcome is determined, both of which could discourage some bettors from participating.

Keywords

Heuristics Market efficiency Totals Betting Baseball Profitability 

JEL Classification

Codes G14 L83 

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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.Department of EconomicsEastern Michigan UniversityYpsilantiUSA
  2. 2.Accounting and FinanceEastern Michigan UniversityYpsilantiUSA

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