Title

Basketball Market Efficiency and the Big Dog Bias

Department

Economics, Finance, & Quantitative Analysis

Document Type

Article

Publication Date

10-1-2012

Abstract

A betting rule is devised to profit from an alleged unwillingness of strong favorites in the National Basketball Association to cover large point spreads. Imaginary wagers placed on NBA underdogs awarded 10+ points by Las Vegas oddsmakers produced a significantly nonrandom wins-to-bets ratio of 53.4 percent during the five consecutive seasons ending in 2007. The failure to generate a W/B ratio of at least 55.4 percent over the 758 games meeting our point spread constraint precludes any claim of profitability.

Journal

New York Economic Review

Volume

43

First Page

70

Last Page

74