Additional evidence of heuristic-based inefficiency in season wins total betting markets: Major League Baseball
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.
KeywordsHeuristics Market efficiency Totals Betting Baseball Profitability
JEL ClassificationCodes G14 L83
- Woodland L, and Woodland B (2013) The National Football League season wins total betting market: the impact of heuristics on behavior. Southern Economic Journal, forthcoming. Published online December 11, 2013. doi:10.4284/0038-4038-2013.145
- Woodland B, and Woodland L (2015) Testing profitability in the NBA season wins total betting market. Int J Sport Finance 10:160–174Google Scholar