Featured Research

from universities, journals, and other organizations

Does the wisdom of crowds prevail when betting on football?

Date:
November 15, 2010
Source:
University of Chicago Press Journals
Summary:
Point spreads -- the number of points by which a strong team can be expected to defeat a weaker team -- are supposed to reflect the "wisdom of crowds." But a new study found that crowds don't have a clue.

Point spreads -- the number of points by which a strong team can be expected to defeat a weaker team -- are supposed to reflect the "wisdom of crowds." But a new study in the Journal of Consumer Research found that crowds don't have a clue.

"Point spread betting markets seem to offer an important example of crowd wisdom, because point spreads are very accurate and are widely believed to reflect the 'crowd's' prediction of upcoming sporting events," write authors Joseph P. Simmons (Yale University), Leif D. Nelson (University of California at Berkeley), Jeff Galak (Carnegie Mellon University), and Shane Frederick (Yale University). But previous research shows that bettors are biased in their predictions; their intuitions tend to favor "favorites" over "underdogs."

The authors conducted a season-long investigation of the betting habits of enthusiastic NFL football fans from diverse regions of the United States. Participants wagered more than $20,000 on football games against point spreads that were manipulated to favor the underdog.

The authors first tested a hypothesis that crowds will wisely choose underdogs against spreads that disadvantage favorites. The bettors failed this test, predicting vastly more favorites (89 percent) than underdogs. Next, they found that even when bettors were warned that the spreads had been increased they still predicted favorites only slightly less often (83 percent).

"In this context, the temptation to rely on one's intuition is so strong as to lead people to rely on what they intuitively feel to be true (this favorite will prevail against the spread) rather than on what they generally know to be true (the favorite will usually lose against the spread)" the authors write. And it seems people have trouble learning from their mistakes: the crowd's predictions worsened over time, rather than getting better.

Finally, the researchers hit upon a method of eliciting better choices. "Asking people to predict point differentials rather than make choices against point spreads decreased reliance on faulty intuitions and produced vastly different, and vastly wiser, predictions against the spread," the authors conclude.


Story Source:

The above story is based on materials provided by University of Chicago Press Journals. Note: Materials may be edited for content and length.


Journal Reference:

  1. Joseph P. Simmons, Leif D. Nelson, Jeff Galak, and Shane Frederick. Intuitive Biases in Choice vs. Estimation: Implications for the Wisdom of Crowds. Journal of Consumer Research, June 2011

Cite This Page:

University of Chicago Press Journals. "Does the wisdom of crowds prevail when betting on football?." ScienceDaily. ScienceDaily, 15 November 2010. <www.sciencedaily.com/releases/2010/11/101115151946.htm>.
University of Chicago Press Journals. (2010, November 15). Does the wisdom of crowds prevail when betting on football?. ScienceDaily. Retrieved April 19, 2014 from www.sciencedaily.com/releases/2010/11/101115151946.htm
University of Chicago Press Journals. "Does the wisdom of crowds prevail when betting on football?." ScienceDaily. www.sciencedaily.com/releases/2010/11/101115151946.htm (accessed April 19, 2014).

Share This



More Science & Society News

Saturday, April 19, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Drought Concerns May Hurt Lake Tourism

Drought Concerns May Hurt Lake Tourism

AP (Apr. 18, 2014) Operators of recreational businesses on western reservoirs worry that ongoing drought concerns will keep boaters and other visitors from flocking to the popular summer attractions. (April 18) Video provided by AP
Powered by NewsLook.com
Small Reactors Could Be Future of Nuclear Energy

Small Reactors Could Be Future of Nuclear Energy

AP (Apr. 17, 2014) After the Fukushima nuclear disaster, the industry fell under intense scrutiny. Now, small underground nuclear power plants are being considered as the possible future of the nuclear energy. (April 17) Video provided by AP
Powered by NewsLook.com
Heartbleed Hack Leads To Arrest

Heartbleed Hack Leads To Arrest

Newsy (Apr. 17, 2014) A 19-year-old computer science student has been arrested in relation to a data breach of 900 social insurance numbers from Canada's revenue agency. Video provided by Newsy
Powered by NewsLook.com
Scientists Create Stem Cells From Adult Skin Cells

Scientists Create Stem Cells From Adult Skin Cells

Newsy (Apr. 17, 2014) The breakthrough could mean a cure for some serious diseases and even the possibility of human cloning, but it's all still a way off. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins