One of the most powerful psychology models is "Reversion to the Mean."
See the recently concluded Australia- South Africa test as a superb example of this.
End of Day 1- Aus- 214/8.
Day 2- Aus- 284 all out. ( M. Clarke- 151)
S.A- 96 all out.
Aus- 47 all out ( Recovered from 21/9)
So, S.A needed 236 to win the match which looked huge at that stage.
Not many would have put money on S.A to chase this down.
A trend of low scores was established on Day 2, and everyone (most) would have put their money on this trend to continue.
I, in my office, tried to find mispriced bets for mean reversion to occur. Could not find in this case.
But there is always a place to turn to, to find mispriced bets where reversion to the mean is not expected.
Trends are considered to be the destiny.
See the trend below-
Ask yourself, can this trend continue for ever?
If something can't continue forever, it ll surely end one day.
See the recently concluded Australia- South Africa test as a superb example of this.
End of Day 1- Aus- 214/8.
Day 2- Aus- 284 all out. ( M. Clarke- 151)
S.A- 96 all out.
Aus- 47 all out ( Recovered from 21/9)
So, S.A needed 236 to win the match which looked huge at that stage.
Not many would have put money on S.A to chase this down.
A trend of low scores was established on Day 2, and everyone (most) would have put their money on this trend to continue.
I, in my office, tried to find mispriced bets for mean reversion to occur. Could not find in this case.
But there is always a place to turn to, to find mispriced bets where reversion to the mean is not expected.
Trends are considered to be the destiny.
See the trend below-
If something can't continue forever, it ll surely end one day.
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