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Identifying Investor Sentiment from Price Paths: The Case of Football Betting

Posted: 30 Mar 2000  

Christopher Avery

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Judith A. Chevalier

Yale School of Management; National Bureau of Economic Research (NBER)

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 Classification: G12

Suggested Citation

Avery, Christopher and Chevalier, Judith A., Identifying Investor Sentiment from Price Paths: The Case of Football Betting. Journal of Business, Vol. 72, Issue 4, October 1999. Available at SSRN: https://ssrn.com/abstract=171970

Christopher Avery

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-496-4063 (Phone)
617-496-1722 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Judith A. Chevalier (Contact Author)

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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