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Alexander Traugutt and Jarid Morton
''Is herding efficient? Evidence from the college football point spread market''
( 2022, Vol. 42 No.3 )
This study examined the efficiency of herd behavior in the college football point spread market during the 2020-21 season, which was significantly impacted by the coronavirus pandemic. The virus caused chaos throughout the sport, which featured empty stadiums, infectious outbreaks, and scheduling disruptions. These uncertainties created an information gap, particularly regarding player availability, for sports bettors who utilize these types of data to build their models. As such, this market coupled with the pandemic backdrop provides an optimal setting to test the efficiency of herd behavior. Results indicated that the market was statistically inefficient, and from a herding standpoint, contrarian strategies resulted in win percentages that exceeded 50% for various probability cutoffs. This research presents applicable findings related to psychological factors that influence investor behavior, which can be generalized to markets within and outside of sport.
Keywords: herd behavior, market efficiency, college football, sports betting, pandemic
JEL: L8 - Industry Studies: Services: General
G1 - General Financial Markets
Manuscript Received : Jan 24 2022 Manuscript Accepted : Sep 30 2022

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