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Patience is a virtue: exploiting behavior bias in gambling markets

Author

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  • Kevin Krieger

    (University of West Florida)

  • Justin L. Davis

    (University of West Florida)

  • James Strode

    (Ohio University)

Abstract

We examine the influence of bettor behavior in sports gambling markets and the resulting creation of exploitable betting opportunities for patient bettors. Specifically, we build on past research on behavioral bias as a predictor of bettor behavior and explore how this behavior can result in market inefficiencies. Using data from National Football League games taking place between 2007-2019, we find that bettor decision-making is erroneously influenced by recent performance of teams. This bias creates profitable betting opportunities for those less subject to recency bias, and are surprisingly greater for the more prudent, patient bettor. Our findings confirm the need for additional research examining the influence of psychology and behavioral biases on individual decision making and how these factors can influence market efficiency.

Suggested Citation

  • Kevin Krieger & Justin L. Davis & James Strode, 2021. "Patience is a virtue: exploiting behavior bias in gambling markets," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(4), pages 735-750, October.
    • Handle: RePEc:spr:jecfin:v:45:y:2021:i:4:d:10.1007_s12197-021-09557-5
    DOI: 10.1007/s12197-021-09557-5
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    References listed on IDEAS

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    Cited by:

    1. Kevin Krieger & Justin Davis, 2024. "Examining the impact of visibility on market efficiency: lessons from movement in NFL betting lines," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 48(2), pages 263-279, June.
    2. Marius Ötting & Christian Deutscher & Carl Singleton & Luca De Angelis, 2022. "Gambling on Momentum," Economics Discussion Papers em-dp2022-10, Department of Economics, University of Reading.
      • Marius Otting & Christian Deutscher & Carl Singleton & Luca De Angelis, 2022. "Gambling on Momentum," Papers 2211.06052, arXiv.org.
    3. Marius Ötting & Christian Deutscher & Carl Singleton & Luca De Angelis, 2023. "Gambling on Momentum in Contests," Economics Discussion Papers em-dp2023-08, Department of Economics, University of Reading.

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    More about this item

    Keywords

    Market Efficiency; Behavioral Bias; Sports Gambling; Decision Making;
    All these keywords.

    JEL classification:

    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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