Traders in NFL betting markets ignore 80% of new information regardless of how important the news is.
April 25, 2026
Original Paper
Unknown Rational Expectations: Evidence from NFL Prediction Markets
SSRN · 6642738
The Takeaway
Financial theory assumes that people update their expectations quickly when new facts emerge. These prediction markets show a massive cognitive discount where participants are systematically inattentive to game-changing data. This friction is not caused by people being busy or overwhelmed by too many alerts. It is a fundamental feature of human cognition that creates a massive gap between reality and market pricing. Even when millions of dollars are on the line, the human brain struggles to map new events to real probabilities.
From the abstract
Rational expectations are well-supported in financial markets. Evidence that traders are also rationally inattentive, however, runs through a single channel: the business cycle. Whether inattention binds independently of cyclical variation-as a primitive cognitive friction mapping objective events into subjective beliefs-remains open. We answer using NFL prediction markets: binary contracts traded on Polymarket against a cash-like safe asset, benchmarked against ESPN's continuous win probability