Does Smart Money Believe in the Hot Hand? Evidence From Daily Fantasy Baseball

Does Smart Money Believe in the Hot Hand? Evidence From Daily Fantasy Baseball

The behavior of informed traders, or “smart money,” in sports betting markets has long been of interest to researchers. In this paper, we focus specifically on the behavior of smart money in Major League Baseball (MLB) daily fantasy sports (DFS) contests to determine whether they avoid cognitive-beh...

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Veröffentlicht in:The American behavioral scientist (Beverly Hills) 2024-03
Hauptverfasser: Losak, Jeremy M., Weinbach, Andrew P., Paul, Rodney J.
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description The behavior of informed traders, or “smart money,” in sports betting markets has long been of interest to researchers. In this paper, we focus specifically on the behavior of smart money in Major League Baseball (MLB) daily fantasy sports (DFS) contests to determine whether they avoid cognitive-behavioral biases to increase their expected earnings. Specifically, we investigate whether smart money avoids the hot hand bias, where individuals tend to overestimate the likelihood of success for players on a hot streak. Using a dataset of MLB DFS contests, we find that winning lineups have lower usage rates for players exhibiting the hot hand compared to losing lineups. This suggests that smart money identifies and fades the hot hand strategy to increase their expected earnings.
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title Does Smart Money Believe in the Hot Hand? Evidence From Daily Fantasy Baseball
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