Efficiency in the madness? examining the betting market for the ncaa men’s basketball tournament

The NCAA men’s basketball tournament is one of the most popular sporting events in the world and gives rise to a substantial betting market. This study uses data from 1996 to 2019 to examine efficiency in this market and to analyze whether bettors display any significant biases with respect to tourn...

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Bibliographic Details
Published in:Journal of economics and finance 2020-07, Vol.44 (3), p.611-626
Main Author: Hickman, Daniel C.
Format: Article
Language:English
Subjects:
Bias
College basketball
Economics
Economics and Finance
Efficiency
Efficient markets
Expenditures
Finance
Gambling
Macroeconomics/Monetary Economics//Financial Economics
Market prices
Professional baseball
Professional basketball
Studies
Tournaments & championships
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Summary:The NCAA men’s basketball tournament is one of the most popular sporting events in the world and gives rise to a substantial betting market. This study uses data from 1996 to 2019 to examine efficiency in this market and to analyze whether bettors display any significant biases with respect to tournament seeding or conference affiliation of participants. The results indicate the market operates at an efficient level, with very little in the way of detectable bias based on seeding. The most noticeable anomaly is a tendency for teams from the Atlantic Coast Conference (ACC) to cover the spread less than would be expected in an efficient market, particularly in the opening round.
ISSN:1055-0925
1938-9744
DOI:10.1007/s12197-020-09507-7