Title

Learning, Price Formation and the Early Season Bias in the NBA

Publication Title

Finance Research Letters

Publication Date

9-2007

Document Type

Article

DOI

10.1016/j.frl.2007.04.002

Keywords

betting, market, NBA, efficiency, point, spread, sides, totals, over, under

Disciplines

Finance and Financial Management

Abstract

We test the NBA betting market for efficiency and find that totals lines are significantly biased early each season, yet sides lines do not show a similar bias. While market participants generally force line movements in the correct direction from open to close, they do not fully remove the identified bias in totals lines. This inefficiency enables a profitable technical trading strategy, as the resulting win rate of our proposed simple betting strategy against the closing totals line is 56.72%.

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