James, author of the much praised Programming for Betfair, corrects me on his recent computer upgrade project which was actually:
Windows 10, old boy, not IE 10.
To back-up your argument that the bookies now use "wisdom of crowds" with which to set their initial odds...
I did some consultancy two years ago for a company who, shall we say, used to send out teams of agents to collect coupons with your columns of x's on them. They have since gone online and wanted to put out a new product, which has an innovative back-end (NDA signed), now available on their website.
Wanting me to do some risk analysis for them, I was tasked with a) predicting the outcome of football games, and b) setting initial odds so that they could seed their markets to make them look popular (as Betfair, initially did) and in such a way that they did not lose too much of that seed money.
I had the solution pretty much worked out on the train home and emailed it to them the next day.
a) Forget it. Use wisdom of the crowds (i.e. Betfair) to determine odds prior to going in-play. Their markets shut when a match goes in-play.
b) Create a Dutch book and spread your seed money accordingly. So long as you Dutch properly then you won't lose any seed money as you are winning back your own money.
I think I made them look a bit stupid with such an obvious solution and they were initially reluctant to pay but I got my fee in the end.
Any way, it was a nice day in Liverpool. Oops!The story has some credibility, until the "nice day in Liverpool" reference, at which point the whole tale unravels as such an event is surely not plausible. My 1977 visit there was somewhat traumatic, and has left an indelible impression of the city, or at least the red part of it. After being attacked by a large group of 'fans' shortly after exiting the coach, the game was followed by a night in the car park at a Liverpool hospital while a 12 year old had his injuries checked out, before it was determined he had a fractured skull and would be detained. The coach eventually arrived back in London around 6am. Credit to the group of Everton fans (they were hosting Stoke City at the same time - FA Cup weekend) who 'rescued' him and brought him back to the waiting Palace coach.
Back to James' comment, and for a time in my life, I was one of the afore-mentioned 'agents' collecting coupons on a Wednesday night, earning a little extra pocket money.
Having mentioned that "the crowd" usually does a pretty good job at pricing up markets and by extension determining handicap lines, the BLUnders system hit a rare double-push the other day. The San Antonio Spurs v New Orleans Pelicans game lines were -13 on the handicap and 207 on the total points.
As you can see from the above screenshot, both lines were hit.
Somewhat related to the topic of current markets being the result of "an equilibrium price that is formed by matching the supply and demand" rather than the previous process of bookies setting the odds, an evolutionary adaptation necessary for the traditional bookmakers to survive, I keep meaning to link you to this video from Peter Webb about the failure of exchanges to take over the betting world. Peter may have missed the point about the 1% a few weeks ago, but I believe he has it right on the topic of exchanges. They are a far better way of betting, and the fact that they appear to have lost their direction, hopefully a temporary setback, and the possible reasons for this, is an interesting one.