The Reverse Favourite-longshot Bias and Market Efficiency in Major League Baseball: An Update

Racetrack and sports betting markets have been researched extensively with respect to the question of market efficiency. In contrast to the consistently observed favourite-longshot bias found in racetrack betting markets, it has been shown that gamblers in the market for Major League Baseball games reveal the opposite behaviour. This paper updates the previous study with ten years of additional data for the 1990-99 seasons. The strength of the reverse favourite-longshot bias is virtually identical to the original paper. The result suggests that, contrary to most reported inefficiencies in gambling markets, this bias appears to be permanent. Copyright Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research 2003.