Behavioral Biases in Daily Fantasy Baseball: The Case of the Hot Hand

Abstract

Despite mixed evidence, sport participants and fans heavily believe in the existence of the hot hand. Prior literature examining NBA and NFL betting markets found betters were biased towards hot teams. Using a unique market and data set, this study identifies if the hot hand is prevalent in daily fantasy baseball contests, if there is a profitable hot hand selection strategy, and if consumers believe in its existence. Results show that while there is no evidence of a hot hand effect, and no evidence of a profitable hot hand strategy, consumers believe in and incorporate it in their lineup decisions.