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Identifying Investor Sentiment from Price Paths: The Case of Football Betting
Christopher Avery Harvard University - John F. Kennedy School of Government; National Bureau of Economic Research (NBER) Judith A. Chevalier Yale School of Management; National Bureau of Economic Research (NBER) Journal of Business, Vol. 72, Issue 4, October 1999 Abstract: We examine the hypothesis that sentimental bettors can affect the path of prices in football betting markets. We hypothesize that sentimental traders follow the advice of false experts, believe excessively in momentum strategies, bet excessively on teams that are well known and covered in the media. We generate proxies for these sources of sentiment and show that point spreads move predictably over the course of the week, partially in response to variables known prior to the opening of betting. We show that a betting strategy of betting against the predicted movement in the point spread is borderline profitable.
JEL Classifications: G12 Accepted Paper SeriesDate posted: March 30, 2000 ; Last revised: March 30, 2000Suggested CitationContact Information
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