I note this only since Tyler Cowen's post refers to the current odds in the NBA Finals as "Free Money." I assume this is his objective, rational opinion, and not merely reflective of his admiration of the magnificent Dwyane Wade:
Over at www.tradesports.com, the Dallas Mavericks, while down 3-2 in a seven-game series, are still favored with a contract trading in the 53-55 range.
When looking at the World Cup Odds yesterday morning, I noticed the same thing at Betfair. And indeed, the Mavs are still favored there at about 9-10.
Perhaps the market is poorly uninformed on the relative talents of Wade + Shaq et al vs. Nowitzki + Terry et al. Or perhaps the market has not priced in Commissioner Stern's vendetta against Mavs owner Mark Cuban, but I doubt that is what motivated Tyler's post.
Free money? If the Heat's probability of winning each game is .3, the series is currently a 50-50 proposition. I admit to being puzzled by the odds initially. But if you believe the Mavs are the better team and the home court advantage is big (it is probably the difference in two of Miami's three wins), then the price seems a reasonable proposition.
While I'm at it, congratulations to the Hurricanes for winning the Stanley Cup! As much as I dislike the American playoff format, the Canes looked the better hockey team to me, with the exception of game six.
P.S. For what it's worth, the Mavs + 3.5 currently returns 20 cents on the dollar for game 6 at Betfair, and are 5.5 to 6 point favorites in Vegas. I'm not sure what the data say for 5.5 and 6 point home favorites - do they win 70% of their games?
Update: The Betfair market is unchanged, and the Tradesports market has strengthened slightly (converging with the Betfair price at 55 cents to the dollar). This despite continuing signs that the Mavs may be distracted by the feeling that they've been robbed. Debit another $250k from Mark Cuban's bank account.