Do Beliefs Reflect Information Reliability? Evidence From Betting Markets

86 Pages Posted: 6 Apr 2016 Last revised: 27 Mar 2020

See all articles by Constantinos Antoniou

Constantinos Antoniou

University of Warwick - Warwick Business School

Christos P. Mavis

University of Surrey - Surrey Business School

Date Written: March 25, 2020

Abstract

Beliefs should be affected more strongly by reliable signals. We test this notion, using beliefs inferred from bookmakers’ odds for tennis matches, exploiting exogenous variation in information reliability related to whether a tennis match is played in a long or short format. We find that bookmakers’ beliefs do not fully reflect the reliability of available signals. This insensitivity to information reliability is costly to bookmakers. Results from a placebo test using women’s matches, where all matches are played in the same format, support our conclusions. Insensitivity to information reliability affects beliefs in other sports-betting markets, as well as financial markets.

Keywords: Field Experiments, Bayes Rule, Decision Heuristics

JEL Classification: D8, G1

Suggested Citation

Antoniou, Constantinos and Mavis, Christos P., Do Beliefs Reflect Information Reliability? Evidence From Betting Markets (March 25, 2020). Available at SSRN: https://ssrn.com/abstract=2757037 or http://dx.doi.org/10.2139/ssrn.2757037

Constantinos Antoniou (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Christos P. Mavis

University of Surrey - Surrey Business School ( email )

Guildford, Surrey GU2 7XH
United Kingdom

HOME PAGE: http://www.surrey.ac.uk/people/christos-p-mavis

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