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Do People Underreact to Information? Evidence from Odds on Tennis Matches

Thursday 30 November 12:00 until 14:00
Jubilee G30
Speaker: Christos Mavis (Surrey Business School)
Part of the series: Finance Research Seminars


We conduct a field test of Bayesian reasoning, examining whether people form expectations by placing a larger weight on signals that are more informative with lower process variance. We analyse subjective probabilities inferred from odds offered by bookmakers on the outcomes of professional men's tennis matches, exploiting exogenous variation in process variance related to the format with which tennis matches are played. We find that bookmakers are not fully sensitive to variations in process variance, thus underreact when setting odds for higher-skilled players for longer matches. The resulting biases in expectations appear to be costly to bookmakers. Results from various robustness tests, including a laboratory experiment, using a person-to-person betting exchange, and a placebo test using women's matches where all matches are played in the same format, support out conclusions.


Christos is a Lecturer (Assistant Professor) of Finance in the Surrey Business School in the University of Surrey. He graduated from the National Kapodistrian University of Athens with a BSc degree in Economics. Christos holds an MSc degree from Durham Business School in the field of Corporate and International Finance with distinction. He completed his PhD in the area of Corporate Finance and, more specifically, in Mergers and Acquisitions (M&As) at the ICMA Centre in the University of Reading. Christos is the Programme Director of the MSc in Corporate Finance and he is also a Fellow of the Higher Education Academy.

Christos' main interests lie in merger waves, CEO turnovers, public vs private takeover targets, and CEO acquisitiveness and their impact on shareholder value creation. His research is presented every year in prestigious North American and European Conferences and his most current work was published in the European Journal of Finance. Christos currently teaches Topics in Finance and has previously taught Corporate Finance, Portfolio Management, and Microeconomics.

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By: Jessica Kistnasamy
Last updated: Monday, 16 October 2017