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Information and accuracy in pricing: Evidence from the NCAA men׳s basketball betting market

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  • Berkowitz, Jason P.
  • Depken, Craig A.
  • Gandar, John M.

Abstract

In this paper, we test whether accuracy in the wagering markets for NCAA Division I men׳s basketball improves when there are more betting lines available for a given game. The empirical evidence indicates that when the money line is offered, it has no impact on the accuracy of the sides line as it is a redundant security, but the offering of the totals line impacts the accuracy of the sides line. We interpret this as evidence that the totals line provides additional information to uninformed bettors that improves the accuracy of the sides line in its role as a price.

Suggested Citation

  • Berkowitz, Jason P. & Depken, Craig A. & Gandar, John M., 2015. "Information and accuracy in pricing: Evidence from the NCAA men׳s basketball betting market," Journal of Financial Markets, Elsevier, vol. 25(C), pages 16-32.
    • Handle: RePEc:eee:finmar:v:25:y:2015:i:c:p:16-32
    DOI: 10.1016/j.finmar.2015.06.003
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    Cited by:

    1. Mills, Brian M. & Salaga, Steven, 2018. "A natural experiment for efficient markets: Information quality and influential agents," Journal of Financial Markets, Elsevier, vol. 40(C), pages 23-39.

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    More about this item

    Keywords

    Efficient market hypothesis; Market efficiency; Security price; Betting market;
    All these keywords.

    JEL classification:

    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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