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POINT SHAVING IN COLLEGE BASKETBALL: A CAUTIONARY TALE FOR FORENSIC ECONOMICS

Authors

  • DAN BERNHARDT,

    1. Bernhardt: IBE Distinguished Professor of Economics and Finance, Department of Economics, University of Illinois, 1407 W. Gregory, Urbana, IL 61801. Phone 1-217-244-5708, Fax 1-217-244-6678, E-mail danber@illinois.edu
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  • STEVEN HESTON

    1. Heston: Associate Professor of Finance, Department of Finance, Robert H. Smith School of Business, University of Maryland, College Park, MD 20742-1815. Phone 1-301-405-9686, Fax 1-301-314-9120, E-mail sheston@rhsmith.umd.edu
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    • *

      D.B. acknowledges support from NSF grant SES-0317700. We thank Judy Chevalier, Tony Smith, and Justin Wolfers for helpful comments.


Abstract

Point shaving is the practice by favored teams of attempting to win by less than the point spread to yield profits for gamblers who bet on the underdog. Consistent with point shaving, strong favorites are anomalously likely to win by less than the spread. To distinguish between innocent and criminal explanations, we (1) exploit information in line movements and (2) isolate games without betting lines to identify games where point shaving is implausible and document similar patterns. The data are better explained by strategic efforts to maximize the probability of winning. These findings highlight the importance of methodology design. (JEL L83, K42)

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