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Do bookies take advantage of irrational preference for the home team?

Eric Barker
May 25, 2010

You bet they do:

This paper investigates sentiment betting both theoretically and empirically. We model the profitable pricing decision of a bookmaker in the presence of both price sensitive and price-insensitive sentiment bettors who derive extra utility by backing the team they support. Using unique betting volume data from a bet exchange market, we first test the validity of employing home attendance and press coverage as proxies of the amount of sentimental betting. Second, multivariate analysis of a sample of over 32,000 bets on English soccer games shows that bookmakers actively shade prices to attract betting volume evoked by sentiment. Bookmakers offer more favourable odds where fan support is comparably large. The sentiment bias has amplified recently as a reaction to the increased overall price elasticity and the greater share of price-sensitive sentiment bettors in online betting.

Source: “The sentiment bias in English soccer betting” from Institute for Strategy and Business Economics, University of Zurich, Working Paper No. 89, July 2008

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Post Information
Title Do bookies take advantage of irrational preference for the home team?
Author Eric Barker
Date May 25, 2010 6:00 PM UTC (13 years ago)
Blog bakadesuyo
Archive Link https://theredarchive.com/blog/bakadesuyo/do-bookies-take-advantage-of-irrational-preference.17120
https://theredarchive.com/blog/17120
Original Link https://www.bakadesuyo.com/2010/05/do-bookies-take-advantage-of-irrational-prefe/
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