ECIN Replication Package for "When the League Table Lies: Does Outcome Bias Lead to Informationally Inefficient Markets?"

We study whether outcome bias persists in markets with
actors who are financially incentivized to make optimal decisions. We test
whether inherently noisy match outcomes from European football are correctly
incorporated into prices from a betting exchange market. We find that market
prices overestimate (underestimate) the winning probability of teams that
previously overperformed (underperformed) in terms of match outcomes compared
to their performance based on “expected goals”. This pattern is mirrored in
negative (positive) betting returns on overperforming (underperforming) teams.
These results suggest that even competitive market mechanisms fail to
completely erase outcome bias.

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