Erasmus university rotterdam
Favorite longshot bias in tennis
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- Contradicting literature
Favorite longshot bias in tennisAs seen in sections 2.1 and 2.2 there is a lot of research on the favorite longshot bias in horse racing and football. In table 3, the articles about the favorite longshot bias in tennis are summarized. This are only two articles and the article of Cain et al. (2003) contains besides tennis also study on boxing, cricket, horserace, snooker and tennis. Cain et al. (2003) investigated the returns on bets in different kinds of sports, namely boxing, cricket, horserace, snooker and tennis. In each sport they used a very small amount of data, which lead to very poor returns. The sample, which was used to study tennis, only contains 91 matches of Wimbledon in 1996. The data which will be used in this thesis will be over 200 times larger. In 2007 there was a study from Forrest & Mchale which investigate the favorite longshot bias in tennis tournaments with a larger dataset. In their study they used 17.000 possible odds, which means that this study is still more than 2 times bigger with 37.220 possible odds. The paper finds an positive bias throughout the range of odds. Table 3: Literature summary ‘Favorite longshot bias in tennis’. The table below summarizes the academic articles that are discussed in 2.3 Favorite longshot bias in tennis.
In this subsection, the contradicting literature is discussed, because not all academic articles found a favorite longshot bias. There are investigations which found that the favorites are the ones that are overvalued, while the underdogs are undervalued, this is called the reverse favorite longshot bias. The results of the articles discussed in this section are in contradictory to what is found by most of the literature in section 2.1 to 2.3. Table 4: Literature summary ‘Contradicting literature’. The table below summarizes the academic articles that are discussed in 2.4 Contradicting literature.
In the Asian racetrack market there are a few investigations who found a reverse favorite longshot bias, namely; Busche & Hall (1988), Busche & Walls (2000). Vaughan Williams & Paton (1998) found a reverse favorite longshot bias by investigating 5903 horses running (510 horseraces) in Britain. Dixon & Pope (2004) did research in the fixed odds football betting market. In this study the odds of the matches are fixed before the game, which means that there is no influence of betting behavior. The results of this study show that there is a reverse favorite longshot bias in UK football from 1993 to 1996. Paul & Weinbach (2005) looked at the NBA basketball point spread betting market. The results show systematic bettor misperceptions. Using a strategy of betting the underdogs rejecting the null of a fair bet, a reverse favorite longshot bias is found. Betting these home underdogs not only rejects a fair bet, but it also shown to reject the null of no profitability. Another profitable betting strategy according to this article is betting against winning streaks. Actually, Woodland & Woodland (1994) were one of the first investigators who found a reverse favorite longshot bias. They found this reverse bias in the major league baseball games from the years 1979 to 1989. These results were not in line with the previous literature. In this study they also tested the market efficiency. Because the results gave a reverse favorite longshot bias, which means that betting on the underdogs will give smaller losses than betting on favorites, the market may be inefficient. After the study in 1994, Woodland & Woodland did a similar research in 2001, but this time they investigate the hockey sport. In this study they tested the two same things as in 1994, namely the existence of the favorite longshot bias and the market efficiency. Also in this research they found a reverse favorite longshot bias. The results also show an inefficient betting market. They create a strategy where they bet the underdog in away games in the period 1990 to 1996, which makes 11% profit in those years. There is no doubt looking at the results; there is definitely a reverse favorite longshot bias.
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