Testing efficiency in gambling markets: a comment

Even and Noble (1992) pointed out that the regression-based test for unbiasedness in point spread betting markets is not a valid test when the mean and median of the market's forecast errors are different. In the case where skewness is present, Even and Noble propose a likelihood ratio statisti...

Full description

Saved in:
Bibliographic Details
Published in:Applied economics 1993-07, Vol.25 (7), p.937-937
Main Authors: Gandar, J M, Zuber, R A, Russo, B
Format: Article
Language:English
Subjects:
Economic forecasts
Economic models
Economic theory
Efficiency
Gambling
Skewness
Statistical analysis
Studies
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Even and Noble (1992) pointed out that the regression-based test for unbiasedness in point spread betting markets is not a valid test when the mean and median of the market's forecast errors are different. In the case where skewness is present, Even and Noble propose a likelihood ratio statistic to test for market efficiency. In a comment, the view is expressed that there is no reason to believe that Even and Noble, with their single season of data, have firmly established that there is a consistent and significant skewness problem in the forecast errors of point spread betting lines on National Football League games. The likelihood ratio test statistic proposed by Even and Noble appears to suffer from low power. Also, the test statistic differs little from the chi-square distribution of the square of the standard Z-test for randomness.
ISSN:0003-6846
1466-4283
DOI:10.1080/00036849300000073