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INFORMATION AND IDIOSYNCRATIC RISK IN THE NCAA MEN’S BASKETBALL BETTING MARKET

Ira Horowitz

Abstract


Betting lines and scores from the 2009/10 college basketball season for 169 mid-major and major colleges are used to verify the efficiency hypothesis for the betting-market analogy to the CAPM-based market model. As in that model, the portion of the variance in the spreads that is unexplained by the betting lines is the idiosyncratic risk associated with a team’s games. The paper shows that this risk is due to team-specific and conference-specific informational and consistency-of-play factors that impact bettors’ decisions.


Keywords


information, idiosyncratic risk, NCAA basketball, betting markets, market efficiency, synchronicity, CAPM market model, competitive balance, power ratings, team-specific information, conference-specific information

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DOI: https://doi.org/10.5750/jgbe.v5i3.572

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