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The wisdom of large and small crowds: Evidence from repeated natural experiments in sports betting

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  • Brown, Alasdair
  • Yang, Fuyu

Abstract

Prediction markets have proved excellent tools for forecasting, outperforming experts and polls in many settings. But do larger markets, with a wider participation, perform better than smaller markets? This paper analyses a series of repeated natural experiments in sports betting. The Queen’s Club Tennis Championships are held every year, but every other year the Championships clash with a major soccer tournament. We find that tennis betting prices become significantly less informative when participation rates are affected adversely by the clashing soccer tournament. This suggests that measures which increase prediction market participation may lead to a greater forecast accuracy.

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  • Brown, Alasdair & Yang, Fuyu, 2019. "The wisdom of large and small crowds: Evidence from repeated natural experiments in sports betting," International Journal of Forecasting, Elsevier, vol. 35(1), pages 288-296.
    • Handle: RePEc:eee:intfor:v:35:y:2019:i:1:p:288-296
    DOI: 10.1016/j.ijforecast.2018.06.002
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    2. Kai Fischer & Justus Haucap, 2020. "Betting Market Efficiency in the Presence of Unfamiliar Shocks: The Case of Ghost Games during the Covid-19 Pandemic," CESifo Working Paper Series 8526, CESifo.
    3. Andrés Barge-Gil & Alfredo Garcia-Hiernaux, 2020. "Staking in Sports Betting Under Unknown Probabilities: Practical Guide for Profitable Bettors," Journal of Sports Economics, , vol. 21(6), pages 593-609, August.

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