Wisdom of the crowd AND favourite longshot bias

[allen29]

You said: "There is a website I use that collates individual predictions for various sporting events" Can you reveal your source? Is it a public one ore a paid one?

[Joe]

How can this system actually work? Presumably the betting price you find at a bookmaker is representative of the crowd wisdom. In fact, it should be wiser than your source because it will presumably be based on many more opinions, especially at large bookmakers. The wiser, the price, the more efficient it is, and the closer it should be to the "true" price (whatever that might be). But betting true prices will not give you an edge. it's just tossing coins. OK, so then some bookmakers offer better than true prices, but these bookmakers will ban you quickly as they realise that you are targeting those prices. At an efficient brand like Pinnacle, you will find "wise" prices but you won't find value price, at least not with this method. Unless of course your crowd happens to be wiser than the crowd at Pinnacle, but I would imagine that is unlikely. Anyway, as the previous post asked, I'm also intrigued to know what your "crowd" source is.

[k7814]

joe if u google prediction sports game, theres sites that have comps where ppl all predict.. then get prizes.. the sites also allude to that they sell 'data' to other sources .. bookies maybe? so how do bookies come to their predictions? anyone know?.. im guessing either one to a room full of experts? im guessing the wisdm of crowd works by ppl's mental limitations.. 2 ppl can look at the same pic/scenery/event and come away with completly differnt opinions on what it was, what they seen.. what they focused on.. what they missed.. biases etc etc if bookies do have a room full of experts im guessing they are psychologically different.. some see the forrest..some seee the tress..(plus lots more) they would also need to fuly communicate.. fully understand each other.. would be interesting to create that...see how well it does

[k7814]

wouldnt need to be offline either...u shouldnt need thousands of ppl.. just the different pieces to the jigsaw?

[Chris2b]

Godders, why only English lower league and NRL ?

[Joe]

By definition, the bookmaker's price represents a public wisdom of crowds. When you bet with a bookmaker, you are not really betting against their expert(s). You are betting against all their other customers. OK, so a bookmaker has to take an initial opinion when he opens his lines. That what its experts will do, i.e. set the line to as close as is accurate. Then customers start rolling in and he will adjust his price to manage the liabilities. This is how a bookmaker like Pinnacle Sports operates. Pinnacle is really just like Betfair, taking a commission. Now UK bookmakers still have an old school mentality to all of this. Their traders still see themselves as competing against their customers, which in my opinion is silly. But they do it, and this means that they will more likely open lines with prices that intentionally try to encourage punters to take a nibble, i.e. they deliberately offer loss leading value. Subsequently, they are less likely to shorten prices, because they like to continue to advertise their value via the odds comparison. Hence, their prices are less likely to represent crowd wisdom. So when a smart punter exploits their generosity, they will manage that risk in other ways, by limiting stakes and then closing accounts. That's why the likes of Stan James and others ban winners and Pinnacle Sports do not. But that's also why it much harder to beat the Pinnacle Sports market even though their margin is smaller, because their prices are much "wiser". I can't see how a wisdom of crowds system is going to work at a bookmaker where prices are already wise. I will work at somewhere like Stan James, but they will just ban you.

[MPLouis]

By definition' date=' the bookmaker's price represents a public wisdom of crowds. When you bet with a bookmaker, you are not really betting against their expert(s). You are betting against all their other customers. OK, so a bookmaker has to take an initial opinion when he opens his lines. That what its experts will do, i.e. set the line to as close as is accurate. Then customers start rolling in and he will adjust his price to manage the liabilities. This is how a bookmaker like Pinnacle Sports operates. Pinnacle is really just like Betfair, taking a commission. Now UK bookmakers still have an old school mentality to all of this. Their traders still see themselves as competing against their customers, which in my opinion is silly. But they do it, and this means that they will more likely open lines with prices that intentionally try to encourage punters to take a nibble, i.e. they deliberately offer loss leading value. Subsequently, they are less likely to shorten prices, because they like to continue to advertise their value via the odds comparison. Hence, their prices are less likely to represent crowd wisdom. So when a smart punter exploits their generosity, they will manage that risk in other ways, by limiting stakes and then closing accounts. That's why the likes of Stan James and others ban winners and Pinnacle Sports do not. But that's also why it much harder to beat the Pinnacle Sports market even though their margin is smaller, because their prices are much "wiser". I can't see how a wisdom of crowds system is going to work at a bookmaker where prices are already wise. I will work at somewhere like Stan James, but they will just ban you.[/quote'] Excellent post Joe

[Vilamoura04]

Wouldn't betfair exchange be a better indicator of WoC than pinnacle? I looked into this a few years ago, ie using betfair to identify value in bookmakers prices. I cant remember the details but I had to give up on it - it wasn't profitable.

[Joe]

Yes, Betfair is about as wise at it gets: http://www.12xpert.co.uk/betfair.gif Data is from volume weighted average odds for 50,000 football games played in 2004/05. BTW, I can't seem to get formatting to work properly for my replies here, so apologies for that.

[Joe]

Pinnacle is really just as good, but you have to take into account the favourite-longshot bias for bookmaker odds which you don't get at an exchange. The bias isn't a sign that the odds are unwise, it's just a bookmaker-imposed inefficiency that they use to protect themselves against greater liabilities on mistakes made on longshots. Punters are happy to accept relatively inferior value on low-probability outcomes so its easier for bookmakers to do it like this. At short odds, odds at bookmakers and exchanges are more or less the same.

[De Graaf]

Wouldn't betfair exchange be a better indicator of WoC than pinnacle? I looked into this a few years ago, ie using betfair to identify value in bookmakers prices. I cant remember the details but I had to give up on it - it wasn't profitable.

Why not? Hope it's not an intrusive question.

[Vilamoura04]

No problem, Just tried it for a month or so with very small stakes and it lost money. Almost certainly didn't try it for long enough or with enough scientific rigour.

[macmuck]

Liverpool please

[MPLouis]

A last minute try gave St Helens the win' date=' so tomorrow's bets will all be for £7.49[/quote'] No posts for 1 month - I wonder if you are planning to continue this thread Godders?

[Tiger21]

Yeah my understanding is that Betfair is a perfect market in terms of its accuracy. A friend of mine did his masters on it a few years ago but there are other studies as well.