The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
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Testing Rationality in the Point Spread Betting Market
Published: 09/01/1988 | DOI: 10.1111/j.1540-6261.1988.tb02617.x
JOHN GANDAR, RICHARD ZUBER, THOMAS O'BRIEN, BEN RUSSO
This paper presents empirical tests of market rationality using data from the point spread betting market on National Football League games. Data from this market avoid many common pitfalls of tests of rationality in conventional financial markets. The authors test for rationality with two types of tests, statistical and economic. Results of the tests reveal that the statistical tests cannot reject market rationality while the economic tests do reject market rationality.
Informed Traders and Price Variations in the Betting Market for Professional Basketball Games
Published: 12/17/2002 | DOI: 10.1111/0022-1082.155346
John M. Gandar, William H. Dare, Craig R. Brown, Richard A. Zuber
This paper examines betting line changes from the opening to the closing of the point spread betting market on National Basketball Association games for evidence of informed trader betting. We show that within‐betting period line changes significantly improve the accuracy of betting lines as forecasts of game outcomes. We examine individual line change magnitudes and show that these are directly and proportionately related to biases in opening lines. Further, line changes are of sufficient magnitude to remove these biases by the close of betting. We interpret these results as evidence that informed traders are influential in this market.