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REFERENCE‐DEPENDENT PREFERENCES, LOSS AVERSION, AND LIVE GAME ATTENDANCE
Author(s) -
COATES DENNIS,
HUMPHREYS BRAD R.,
ZHOU LI
Publication year - 2014
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12061
Subject(s) - loss aversion , economics , league , outcome (game theory) , attendance , microeconomics , prospect theory , empirical evidence , empirical research , econometrics , philosophy , physics , epistemology , astronomy , economic growth
We develop a consumer choice model of live attendance at a sporting event with reference‐dependent preferences. The predictions of the model motivate the “uncertainty of outcome hypothesis” (UOH) as well as fans' desire to see upsets and to simply see the home team win games, depending on the importance of the reference‐dependent preferences and loss aversion. A critical review of previous empirical tests of the UOH reveals significant support for models with reference‐dependent preferences, but less support for the UOH. New empirical evidence from Major League Baseball supports the loss aversion version of the model . ( JEL L83, D12)