The impact of smart mobile apps on betting decisions

Smart devices and their user interfaces, ‘apps’ (SDA), have gained rapid acceptance amongst consumers. However, the impact of this technology’s use on the nature and quality of individual decisions has remained under-researched. We fill this gap by examining 4.5 million bets of 5315 bettors in the UK spread betting markets between November 2004 and March 2013. We examine the extent to which employment of a mobile betting app affects the behavioural biases displayed by bettors and the impact on their betting performance. The results suggest that there are demographic differences between those who do and do not use smart devices for betting. Having controlled for demographic characteristics, there are differences in the performance and nature of betting decisions of these two groups. In addition, we show that those who use SDA at some time tend to achieve higher Sharp Ratios, but exercise less betting discipline (measured by disposition effect). Importantly, those who at some time have used smart devices for betting, achieve improved performance (in terms of returns) and risk control (higher Sharp Ratios), when they use SDA compared to when they use traditional betting channels. However, when they use SDA they have a greater tendency to cash in bets which are in profit than those that are in loss (i.e. they are more subject to the disposition effect). We discuss the possible reasons for our findings and the implications for betting market operators, regulators and for the efficiency of betting markets

Systematic and Varying Biases in Parallel State Contingent Gambling Markets

Pari-mutuel odds for longshots in UK horseraces exceed those offered by bookmakers. This effect is less for winning compared to losing horses and is explained by informed gamblers betting disproportionately with the pari-mutuel on winning horses

Herding Behavior in Prediction Markets: Evidence from UK Financial Spread-Trading Markets

We contrast the degree (strong vs. weak), nature (interaction between more and less informed traders; MI and LI, respectively), and patterns of herding behavior (via their feedback strategies) among MI and LI traders and their speed of reaction to shifts in trading by these groups. This is achieved by analyzing individual investment records of 1,943 traders in UK spread-trading markets (2010–2012). We find that herding is far more prevalent than previous studies suggest, particularly among LI; herding activities of MI and LI are related, and the means used to distinguish MI and LI needs to be considered carefully

Does size really matter across time? Financial integration dynamics and stock market capitalization in the Asia Pacific equity markets

The present study argues for size of equity markets, measured by its stock market capitalization, in determining leaders for a fully integrated equity market in the Asia Pacific region. Using cointegration analysis, it was found that Hong Kong SAR could act in such a capacity in the financial integration process. When taking growth-volatility into consideration via the use of Euclidean distance measure, China is diverging from both equity blocks across time and is the least integrated. However, given its growth across time, it is the sole contender for the leadership role surpassing Hong Kong SAR

Assessing bettors' ability to process dynamic information: Policy implications

Regulation is often employed to encourage the provision of readily interpretable, explicitinformation to betting markets in an effort to promote their efficiency. This approach issupported by a considerable volume of laboratory-based research which suggests that individualsmake poor judgments in the face of implicit, dynamic information. This article investigates towhat extent horserace bettors, who have strong incentives to make good probability judgments,require the regulator’s protection from such hostile information environments. In particular, weexamine the accuracy of the subjective probabilities of bettors concerning 16,344 horses in 1671races. We find that bettors are skilled in adopting effective heuristics to simplify their dynamicinformation environment and, even in the face of restricted information, develop well-calibratedjudgments using outcome feedback. A number of factors that help bettors to achieve goodcalibration are identified and the implications for market regulation are discussed