A public (mis)interpretation of Brazil's World Cup performance

Abstract

This study documents public perceptions of the chances of a win for the Brazil National Football Team in the 2014 World Cup, as revealed by betting market data. Details of how odds in betting exchanges (n = 970) actually fluctuated are reviewed, in tandem with Brazil’s actual performance, following a description of the world cup finals and of associated betting markets. The analysis reveals that public perceptions on Brazil’s likelihood of success after each match were low and consistent with their performance, but that they increased before each match that followed. This trend continued until their star player’s injury. Sport betting markets have been compared to financial markets due to their speculative nature, and on this basis, a number of behavioural biases are discussed as possible explanations for the public’s failure to adjust its expectations.