A study of behavioral biases present in sports betting markets

Abstract

This study seeks to establish the behavioral biases exhibited by individuals who participate in sports betting. The biases are manifested by how the individuals (bettors) analyze data pertaining the gamble in order to place their bet on the team that they think will win. The study was carried out using a questionnaire which was distributed to bettors which contained a variety of scenarios that were created to capture the behavioral biases. The data is then analyzed using a logit model. The study finds that the three most common biases exhibited by bettors are Representative bias, Anchoring bias and Favorite/Longshot Bias. In terms of gender, it was also established that the Favorite/Longshot Bias was exhibited more frequently amongst males than females, due to the different perception of risk between males and females.