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This paper examines the recency bias and overreaction in the NFL betting market from 2003 to 2017. Consistent with the … recency bias, bettors are more likely to bet on teams who have won previous outcomes. We add to the literature and find that …-rational behavior as they commit the recency bias …
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We develop a general framework for measuring biases in expectation formation. The method is based on the insight that biases can be inferred from the response of forecast errors to past news. Empirically, biases are measured by flexibly estimating the impulse response function of forecast...
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