In betting markets, the expected return on longshot bets tends to be systematically lower than on favorite bets. This favorite-longshot bias is a widely documented empirical fact, often perceived to be an important deviation from the market efficiency hypothesis. This chapter presents an overview of the main theoretical explanations for this bias proposed in the literature.

The favorite-longshot bias: an overview of the main explanations

OTTAVIANI, MARCO M.;
2008

Abstract

In betting markets, the expected return on longshot bets tends to be systematically lower than on favorite bets. This favorite-longshot bias is a widely documented empirical fact, often perceived to be an important deviation from the market efficiency hypothesis. This chapter presents an overview of the main theoretical explanations for this bias proposed in the literature.
2008
9780444507440
G. Constantinides, H.M Markowitz, R.C. Merton, S.C. Myers, P.A. Samuelson, W.F. Sharpe, Kenneth Arrow, Donald Hausch, W.T. Ziemba
Handbooks in Finance: Handbook of sports and lottery markets
Ottaviani, MARCO M.; P. N., Sorensen
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11565/3735090
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