The Favourite-Longshot Bias, Bookmaker Margins and Insider Trading in a Variety of Betting Markets

  1. Michael Cain,
  2. David Law,
  3. David Peel

Article first published online: 27 JUN 2003

DOI: 10.1111/1467-8586.00174

Issue

Bulletin of Economic Research

Bulletin of Economic Research

Volume 55, Issue 3, pages 263–273, July 2003

Additional Information

How to Cite

Cain, M., Law, D. and Peel, D. (2003), The Favourite-Longshot Bias, Bookmaker Margins and Insider Trading in a Variety of Betting Markets. Bulletin of Economic Research, 55: 263–273. doi: 10.1111/1467-8586.00174

Author Information

  1. University of Wales, Bangor and University of Wales, Cardiff

Publication History

  1. Issue published online: 27 JUN 2003
  2. Article first published online: 27 JUN 2003

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Keywords:

  • Shin model;
  • sports betting
  • D81;
  • L83

This paper verifies the existence of the favourite-longshot bias in a variety of sports betting markets where odds are set by bookmakers, but the precise pattern of the bias is not identical. Evidence is found to support a central prediction of the Shin (1993) model, which asserts that bookmakers are impelled to create a bias in their odds because of the presence of insider traders: that margins increase with the number of competitors.

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