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Toward an understanding of the origins of the favourite-longshot bias: Evidence from online poker markets, a real-money natural laboratory

Peirson, John D., Vaughan Williams, Leighton, Sung, Ming Chien, Johnson, Jonnie E.V. (2016) Toward an understanding of the origins of the favourite-longshot bias: Evidence from online poker markets, a real-money natural laboratory. Economica, 85 (338). pp. 360-382. ISSN 0013-0427. E-ISSN 1468-0335. (doi:10.1111/ecca.12200) (KAR id:55707)

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http://dx.doi.org/10.1111/ecca.12200

Abstract

Evidence of differential returns to bets placed with different probabilities of success has revealed a broadly systematic tendency for low/high probability events to be relatively over/under-bet, a phenomenon known as the favourite-longshot bias. While most of the literature focuses on sports, especially horse racing, we report here the existence of the same phenomenon in online poker games. We find that misperception rather than risk-love offers the best explanation for the behaviour we identify. The paper contributes to the more general literature explaining betting behaviour as well as the prevalence of the favourite-longshot bias in betting markets.

Item Type: Article
DOI/Identification number: 10.1111/ecca.12200
Uncontrolled keywords: Risk, information, efficiency, betting, decision-making
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Lisa Jones
Date Deposited: 26 May 2016 14:34 UTC
Last Modified: 29 May 2019 17:25 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/55707 (The current URI for this page, for reference purposes)
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