Academic journal article Atlantic Economic Journal

Does the Football Market Believe in the "Hot Hand"?

Academic journal article Atlantic Economic Journal

Does the Football Market Believe in the "Hot Hand"?

Article excerpt

Recent articles in the American Economic Review [Brown and Sauer, 1993; Camerer, 1989] have explored the implications of "hot" teams for basketball-betting market efficiency. Their failure to earn abnormal returns, however, may have less to do with efficient pointspreads than with their definition of a hot team.

A hot team not only wins a certain number of consecutive games but does so with margins that exceed those estimated by Las Vegas pointsetters. If the Chicago Bulls, for example, won each of five straight games by four points but had been favored by eight in those outings, they should not be considered hot. By requiring hot teams to beat spreads as well as opponents, this study provides a more penetrating view of the "hot hand" than its antecedents.

Choosing the 28 clubs in the National Football League (NFL) vis-a-vis the 86 or so colleges that are regularly handicapped was dictated by the wish to continue tracking the "hot hand" at the professional level. Shifting the focus from basketball to football seemed a good way to negate the former's elements of fatigue resulting from games on two to three successive nights and, in turn, possibly confounding a "hot-hand" effect. …

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