Efficiency in Micro-Behaviors and FL Bias
Kurihara Kazutaka, Yohei Tutiya
TL;DR
This paper models bettor behaviors in pari-mutuel betting systems, showing that certain efficient betting strategies can actually amplify the favorite-longshot bias rather than reduce it.
Contribution
It introduces a simulation model of bettor behaviors and demonstrates how these behaviors influence the persistence of the favorite-longshot bias.
Findings
Efficient betting behaviors can strengthen the FL bias.
Rapid bet increases near deadlines impact odds distributions.
Betting on high expectation horses does not eliminate FL bias.
Abstract
In this paper, we propose a model which simulates odds distributions of pari-mutuel betting system under two hypotheses on the behavior of bettors: 1. The amount of bets increases very rapidly as the deadline for betting comes near. 2. Each bettor bets on a horse which gives the largest expectation value of the benefit. The results can be interpreted as such efficient behaviors do not serve to extinguish the FL bias but even produce stronger FL bias.
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Taxonomy
TopicsSports Analytics and Performance · Gambling Behavior and Treatments · Consumer Market Behavior and Pricing