HOME BIAS AND INTERNATIONAL BETTING MARKETS: CAN INSTITUTIONAL CONSTRAINTS AND BEHAVIORAL BIASES LEAD TO ARBITRAGE PROFITS?

Article Sidebar

Requires Subscription or Fee PDF (GBP 25)
Published: Jan 2, 2013
DOI: https://doi.org/10.5750/jgbe.v4i3.560
Keywords:
Home bias market efficiency international betting markets behavioral economics

Main Article Content

Ludwig Chincarini
Department of Economics, Pomona College
Christina Contreras
Department of Economics, Pomona College

Abstract

The international sports betting markets are becoming more global, but there is still a large concentration of local bettors in gambling markets of individual countries. Home loyalty and other patterns of human behavior might lead to odds for international competitions being different in different countries with less favorable odds being quoted in the home country; the home bias effect. In this paper we explain the logic of this phenomena and examine a small data set to show the existence of the bias in three different sports: tennis, golf, and European football. We also suggest ideas for a more thorough investigation of the home bias phenomenon.

Article Details

Issue
Vol. 4 No. 3 (2010)
Section
Articles

References

Coval, Joshua D. and Tobias J. Moskowitz. “Home Bias at Home: Local Equity Preference in Domestic Portfolios”. The Journal of Finance, 54:2045–2073, December 1999.

French, Kenneth R. and James M. Poterba. “Investor Diversification and Inter-national Equity Markets”. The American Economic Review, pages 222–226, May 1991.

Lewis, Karen. “Trying To Explain Home Bias in Equities and Consumption”. Journal of Economic Literature, 37:571–608, June 1999.

Nieuwerburgh, Stijn Van and Laura Veldkamp. “Information Immobility and the Home Bias Puzzle”. Journal of Finance, 64:1187–1215, June 2009.

Rhode, Paul W. and Koleman Strumpf. “Manipulating Political Stock Markets:A Field Experiment and a Century of Observational Data”. Working Paper, pages 1–79, October 2008.