The Importance of Betting Early

This version, April 2018

joint with Alessandro Innocenti and Roberto Ricciuti

We evaluate the impact of decision timing on the outcome of the decision, when both the timing and the relevant decision are chosen under uncertainty. Betting markets provide the testing ground, as we exploit an original dataset containing more than one million online bets on games of the Italian Major Soccer League. We find that individuals perform systematically better when they place their bets farther away from the game day. The better performance of early bettors holds controlling for (time invariant) unobservable ability, learning during the season, timing of the odds, unobservable game heterogeneity, and favorite team bias. We attribute this result to the increase of noisy information on game day, which hampers the capacity of late, non-professional bettors to use very simple prediction methods, such as team rankings or last game results. We also find that more successful bettors tend to bet in advance, focus on a smaller set of events, and prefer events associated with smaller betting odds.