Abstract
We provide new evidence of a favorite long-shot bias for bets placed on baseball games. Our analysis uses the difference of mean run differentials as an observable proxy for the probability of a team to win. When baseball is viewed through this proxy, we see that bettors believe favorites are less likely to win than they actually are and long-shots more likely. This result is consistent with prospect theory, which suggests that large and small probabilities are poorly estimated when making decisions with risk.
| Original language | English |
|---|---|
| Article number | 95 |
| Journal | Risks |
| Volume | 11 |
| Issue number | 5 |
| DOIs | |
| State | Published - May 2023 |
Funding
This manuscript has been authored by UT-Battelle, LLC under Contract No. DE-AC05-00OR22725 with the U.S. Department of Energy. The publisher, by accepting the article for publication, acknowledges that the U.S. Government retains a non-exclusive, paid up, irrevocable, world-wide license to publish or reproduce the published form of the manuscript, or allow others to do so, for U.S. Government purposes. The DOE will provide public access to these results in accordance with the DOE Public Access Plan ( http://energy.gov/downloads/doe-public-access-plan ) (accessed on 4 May 2023).
| Funders | Funder number |
|---|---|
| U.S. Department of Energy |
Keywords
- favorite long-shot bias
- prospect theory
- sports betting