Information and Accuracy in Pricing: Evidence from the NCAA Men’s Basketball Betting Market
31 Pages Posted: 18 Mar 2012 Last revised: 13 Feb 2018
Date Written: January 14, 2014
This paper investigates the impact of additional sources of information on the accuracy of pricing in wagering markets. Specifically, this paper tests whether accuracy in the wagering markets for NCAA Division I basketball improves when there are more betting lines available for a given game. The empirical evidence suggests that when additional betting lines are available for a given game the sides line’s accuracy improves. We interpret this as evidence that additional betting lines provide additional avenues for wagers but also additional information to uninformed bettors that helps improve the accuracy of the sides line in its role as a price.
Keywords: market efficiency, security price, betting market
JEL Classification: G13, G14, L83
Suggested Citation: Suggested Citation