Framing Effects and the Market Selection Hypothesis

26 Pages Posted: 19 Dec 2017 Last revised: 28 Feb 2018

See all articles by Alasdair Brown

Alasdair Brown

University of East Anglia (UEA)

Fuyu Yang

University of East Anglia (UEA) - School of Economic and Social Studies

Date Written: February 26, 2018

Abstract

We collect data on 75 million GBP of tennis bets over a 6 year period to analyse whether participants in high-stakes environments recognise simple framing differences. The structure of this market means that we can place the same bet at the same time in two different ways. These two isomorphic bets are framed differently, and often priced differently. We find that bettors make frequent mistakes, choosing the worse of the two bets in 35% of cases. However, bettors who choose the inferior price earn higher returns from their bets, suggesting that their effort has been focused on fundamental information acquisition rather than bet execution. The net result is that market selection may, if anything, slightly favour those who are unable, or unwilling, to recognise framing differences.

Keywords: framing, market selection, betting

JEL Classification: D01, D81, D91, G14

Suggested Citation

Brown, Alasdair and Yang, Fuyu, Framing Effects and the Market Selection Hypothesis (February 26, 2018). Available at SSRN: https://ssrn.com/abstract=3087832 or http://dx.doi.org/10.2139/ssrn.3087832

Alasdair Brown (Contact Author)

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

Fuyu Yang

University of East Anglia (UEA) - School of Economic and Social Studies ( email )

Norwich, Norfolk NR4 7TJ
United Kingdom

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