Levitt speculated that bookmakers substantially improve their profits by biasing the spread very slightly against the favorite. Instead, bookmakers set the margin to make the chance of the favorite covering the spread to be roughly 50 percent. In 2004, University of Chicago economist Steven Levitt identified the fact that point spreads aren’t set like typical market prices, by equating relative levels of supply and demand. It’s easy enough to pick the favorite to win, but what if we were to say the favorite has to win by at least eight points? And what if that eight-point spread were carefully crafted to make the game a toss-up - who would you pick then? This is the type of decision sports bettors have to make all the time. Most of the time, sports betting is more complicated than that. All you have to do is pick a winner for each game in your bracket. To understand why, you have to understand some of the basic functions and malfunctions of human decision-making.įilling out a winning March Madness bracket is difficult, but the process itself is simple. In fact, we bet on the favorite far more frequently than we should. We tend to put our money on the favorite most of the time. Everybody likes to cheer for the underdog, but hardly anyone bets on the underdog to win.
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