Framing effects and the market selection hypothesis: Evidence from real-world isomorphic bets

Brown, Alasdair and Yang, Fuyu (2021) Framing effects and the market selection hypothesis: Evidence from real-world isomorphic bets. Southern Economic Journal, 88 (1). pp. 399-413. ISSN 0038-4038

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Abstract

We collect data on 75 million GBP of tennis bets over a 6 year period to analyze whether participants in high-stakes environments recognize simple framing differences. The structure of this market means that we can place the same bet at the same time in two different ways. These two isomorphic bets are framed differently, and often priced differently. We find that bettors make frequent mistakes, choosing the worse of the two bets in 35% of cases. However, bettors who choose the inferior price earn higher returns from their bets, suggesting that their effort has been focused on fundamental information acquisition rather than bet execution. The net result is that market selection may, if anything, slightly favor those who are unable, or unwilling, to recognize framing differences.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > School of Economics
Depositing User: LivePure Connector
Date Deposited: 14 May 2021 00:06
Last Modified: 18 Aug 2021 11:36
URI: https://ueaeprints.uea.ac.uk/id/eprint/80004
DOI: 10.1002/soej.12519

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