Question

If the totals market is weak-form efficient for the NBA, would researching past scoring patterns of teams lead to profitable betting strategies? Explain.

Answer 1

  A weak form efficient market denotes a market condition where them past strategies , past data, past hypothesis or any past information related to the market is out in the open , the full market is aware of the information and the impact of the information is existent on the current market status, and that these same set of information cannot be used to predict or presume the future status of the market. Such a type of market situation is usually related to an economic state where the demand for the particular or multiple goods have reduced drastically due to these goods or resources of the goods been fully exhausted or utilized. Therefore, the demand for these products have dropped. It could also be if the market is fully aware of the past trend of changes in its economic patterns and is stagnant in current approach. This type of a situation may lead to a very weak form of economy where no development can take place and there is no scope of implementation of a new approach. As per the given condition, the NBA market is a weak form market, which means that the games or matches to be played or being played are resulting in to an expected end. The people who are related to the NBA’s are almost aware of what is going to happen in the game. The good players are performing good, the weaker players are not performing as usual, and those players who are of the mid-caliber are not doing anything significant. The stronger team is winning, and the weaker team is losing the games. This is the state where, nothing unexpected is being assumed out of the NBA.

In this situation, where nothing significant is expected out of the games in the NBA, or nothing out of patter is predicted, betting strategies will totally fail. This is because, the root or base of betting lies in the uncertainty of the game. Betting can only be productive or exist where the outcome of a particular event or as in this case the outcome out of an NBA game cannot be predicted. The NBA games are ending as expected and there is nothing that the betting authorities would want the people to bet on, and even if they do, it is almost for sure, that the people will bet on the known obvious result and this will lead to severe loss to the betting authorities. From the perspective of the people who would want to bet, since the perfect outcome of the games is almost expected , the people will bet fully and heavily on the outcomes and thus gain a lot of money out of it, or it could also be a scenario where , the betting authorities do not fix high prices on betting since the outcome is already expected , and therefore in any case, research from the past games in NBA will not be conducive to the betting environment. Here, betting can only take place if something out of the ordinary takes place or anything unexpected takes place in the games, either thereby changing the end result of the games or creating some sensation among the people about the end result. This will regenerate the people to expect a thrill out of the games. If the NBA players who are not performing well can be motivated to perform better or play put of their skin, and the mid caliber players are motivated to outperform the excellent players, this can bring about a huge change in the way the games are played normally. This will force in some thrill in to the games, as the results then will not be as expected, and the prediction of the games cannot be made. In such a circumstance, betting could thus be profitable.