Are Crowds Wise When Predicting Against Point Spreads? It Depends on How You Ask

Joseph Simmons, Yale University, USA
Leif Nelson, University of California at Berkeley, USA
Jeff Galak, Carnegie Mellon University, USA
Shane Frederick, Yale University, USA
Point spread betting markets are considered an important example of crowd wisdom, because point spreads are accurate and are believed to reflect the “crowd’s” predictions of sporting events. However, a season-long experiment found that a sample of football bettors was systematically biased and performed poorly when predicting which team would win against a point spread. Moreover, the crowd’s biases worsened over time. However, when the crowd was instead asked to predict game outcomes by estimating point differentials, its predictions were unbiased and wiser. Thus, the same “crowd” of bettors can appear wise or unwise, depending on how predictions are elicited.
[ to cite ]:
Joseph Simmons, Leif Nelson, Jeff Galak, and Shane Frederick (2010) ,"Are Crowds Wise When Predicting Against Point Spreads? It Depends on How You Ask", in NA - Advances in Consumer Research Volume 37, eds. Margaret C. Campbell, Jeff Inman, and Rik Pieters, Duluth, MN : Association for Consumer Research, Pages: 94-97 .