I document market inefficiency in the sports lottery market and examine how participants learn from such inefficiency. Using a novel, parimutuel type sports lottery data in Korea, I show that participants underbet certain outcomes relative to their realized probability. The magnitude of this...

This study finds that the extremeness aversion bias documented in decision making studies exists in the sports betting market in which real money is at stake. The magnitude of the bias is large that a naive betting strategy utilizing this bias, since the betting market's inception in 2008...