Is Tiger Woods Loss Averse? Persistent Bias in the Face of Experience, Competition, and High Stakes

Abstract:     
Although experimental studies have documented systematic decision errors, many leading scholars believe that experience, competition, and large stakes will reliably extinguish biases. We test for the presence of a fundamental bias, loss aversion, in a high-stakes context: professional golfers’ performance on the PGA TOUR. Golf provides a natural setting to test for loss aversion because golfers are rewarded for the total number of strokes they take during a tournament, yet each individual hole has a salient reference point, par. We analyze over 1.6 million putts using precise laser measurements and find evidence that even the best golfers - including Tiger Woods - show evidence of loss aversion. On average, this bias costs the best golfers over $1.2 million in tournament winnings per year.

Keywords: Loss Aversion, Behavioral Economics

Working Paper Series