Submission Type

Presentation

Submission Title

The impact of smart mobile apps on betting decisions

Session Title

Session 1-1-D: Data and Player Behavior

Location

Caesars Palace, Las Vegas, Nevada

Start Date

28-5-2019 9:15 AM

End Date

28-5-2019 10:40 AM

Disciplines

Business | Economics | Finance and Financial Management

Abstract

Smart devices and their user interfaces, ‘apps’ (SDA), have gained rapid acceptance amongst consumers. However, the impact of this technology’s use on the nature and quality of individual decisions has remained under-researched. We fill this gap by examining 4.5 million bets of 5315 bettors in the UK spread betting markets between November 2004 and March 2013. We examine the extent to which employment of a mobile betting app affects the behavioural biases displayed by bettors and the impact on their betting performance. The results suggest that there are demographic differences between those who do and do not use smart devices for betting. Having controlled for demographic characteristics, there are differences in the performance and nature of betting decisions of these two groups. In addition, we show that those who use SDA at some time tend to achieve higher Sharp Ratios, but exercise less betting discipline (measured by disposition effect). Importantly, those who at some time have used smart devices for betting, achieve improved performance (in terms of returns) and risk control (higher Sharp Ratios), when they use SDA compared to when they use traditional betting channels. However, when they use SDA they have a greater tendency to cash in bets which are in profit than those that are in loss (i.e. they are more subject to the disposition effect). We discuss the possible reasons for our findings and the implications for betting market operators, regulators and for the efficiency of betting markets.

Keywords

Decision making, smart devices, spread betting, bettors’ behaviour, apps

Author Bio

Johnnie E.V. Johnson is Professor of Decision and Risk Analysis in Nottingham Business School. He has published widely in the areas of risk perception, risk analysis and decision making under uncertainty. Johnnie’s research focuses on exploring the degree to which information is effectively used in financial markets and the factors which influence the efficiency of, and degree of risk taking in, prediction markets and wider financial markets


Ming-Chien Sung is Professor of Risk and Decision Sciences in the Centre for Risk Research at the University of Southampton. Her research focusses on modelling behavior in a range of financial markets and she is particularly focused on exploring new approaches for modelling uncertain outcomes. Ming-Chien has presented papers at numerous international conferences and has published a range of papers in leading international journals. She is currently examining the use of both parametric and nonparametric methods for forecasting the outcomes of uncertain events in financial markets.

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Dr. Juan Carlos Moreno Paredes is a business analyst working in the City of London. He has been employed in a range of financial institutions, undertaking statistical analysis to better understand investor behaviour. He is particularly interested in the insights which can be derived from employing machine learning techniques.


Dr. Tiejun Ma is an Associate Professor in the Centre for Risk Research at the University of Southampton. Dr. Ma’s research focuses on risk analysis and decision-making using quantitative modelling and real-time Big data analysis techniques applied to FinTech, Cyber-Risk, and Resilience of distributed systems. He employs applied data science and mathematical modelling methodologies in the analysis/forecasts of risks, using an inter-disciplinary research strategy, via state-of-the-art computing, data analytics and behavioural analysis techniques.

Funding Sources

none

Competing Interests

none

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May 28th, 9:15 AM May 28th, 10:40 AM

The impact of smart mobile apps on betting decisions

Caesars Palace, Las Vegas, Nevada

Smart devices and their user interfaces, ‘apps’ (SDA), have gained rapid acceptance amongst consumers. However, the impact of this technology’s use on the nature and quality of individual decisions has remained under-researched. We fill this gap by examining 4.5 million bets of 5315 bettors in the UK spread betting markets between November 2004 and March 2013. We examine the extent to which employment of a mobile betting app affects the behavioural biases displayed by bettors and the impact on their betting performance. The results suggest that there are demographic differences between those who do and do not use smart devices for betting. Having controlled for demographic characteristics, there are differences in the performance and nature of betting decisions of these two groups. In addition, we show that those who use SDA at some time tend to achieve higher Sharp Ratios, but exercise less betting discipline (measured by disposition effect). Importantly, those who at some time have used smart devices for betting, achieve improved performance (in terms of returns) and risk control (higher Sharp Ratios), when they use SDA compared to when they use traditional betting channels. However, when they use SDA they have a greater tendency to cash in bets which are in profit than those that are in loss (i.e. they are more subject to the disposition effect). We discuss the possible reasons for our findings and the implications for betting market operators, regulators and for the efficiency of betting markets.