Learning, price formation and the early season bias in the NBA |
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| Authors: | Edward A. Baryla Jr. Richard A. Borghesi William H. Dare Steven A. Dennis |
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| Affiliation: | aEast Tennessee State University, Sam Wilson Hall 227, Johnson City, TN 37614, USA;bTexas State University, McCoy Hall 310, San Marcos, TX 78666, USA;cOklahoma State University–Tulsa, 700 N. Greenwood Ave., Tulsa, OK 74106, USA;dUniversity of North Dakota, Gamble Hall 140B, Grand Forks, ND 58201, USA |
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| Abstract: | We test the NBA betting market for efficiency and find that totals lines are significantly biased early each season, yet sides lines do not show a similar bias. While market participants generally force line movements in the correct direction from open to close, they do not fully remove the identified bias in totals lines. This inefficiency enables a profitable technical trading strategy, as the resulting win rate of our proposed simple betting strategy against the closing totals line is 56.72%. |
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| Keywords: | Betting Market NBA Efficiency Point Spread Sides Totals Over Under |
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