Media attention and betting markets

This paper investigates whether biased media attention affects perceptions about future events. We use data on World Cup tournaments in alpine skiing for the period of 1992–2014 and exploit close races as a source of randomness for ranking positions. Since the allocation of media attention is skewed towards the winner and athletes on the podium, we can estimate the causal effect of media attention. Our results document that ranking schemes generate sharp discontinuities in media attention even in close competitions. However, both regression discontinuity and instrumental variables estimates reveal that biased media attention neither affects prices nor quantities in the betting market. We conduct a series of robustness tests to explore the sensitivity of our results.