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‘It ain’t over till it's over.’ Yogi Berra bias on prediction markets

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  • Lionel Page
Abstract
The recent expansion of prediction markets provides a great opportunity to test the market efficiency hypothesis and the calibration of trader judgements. Using a large database of observed prices, this article studies the calibration of prediction markets prices on sporting events using both nonparametric and parametric methods. While only minor bias can be observed during most of the lifetime of the contracts, the calibration of prices deteriorates very significantly in the last moments of the contracts’ lives. Traders tend to overestimate the probability of the losing team to reverse the situation in the last minutes of the game.

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  • Lionel Page, 2012. "‘It ain’t over till it's over.’ Yogi Berra bias on prediction markets," Applied Economics, Taylor & Francis Journals, vol. 44(1), pages 81-92, January.
    • Handle: RePEc:taf:applec:44:y:2012:i:1:p:81-92
    DOI: 10.1080/00036846.2010.498578
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    Cited by:

    1. Simon Kloker & Tim Straub & Christof Weinhardt, 2019. "Moderators for Partition Dependence in Prediction Markets," Group Decision and Negotiation, Springer, vol. 28(4), pages 723-756, August.
    2. Lohrmann, Christoph & Luukka, Pasi, 2019. "Classification of intraday S&P500 returns with a Random Forest," International Journal of Forecasting, Elsevier, vol. 35(1), pages 390-407.
    3. Brown, Alasdair & Reade, J. James & Vaughan Williams, Leighton, 2019. "When are prediction market prices most informative?," International Journal of Forecasting, Elsevier, vol. 35(1), pages 420-428.

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