Reference‐Dependent Preferences, Loss Aversion, and Live Game Attendance

15 Pages Posted: 9 May 2014

See all articles by Dennis Coates

Dennis Coates

University of Maryland, Baltimore County

Brad R. Humphreys

West Virginia University - Department of Economics

Li Zhou

University of Alberta - Department of Economics

Date Written: July 2014

Abstract

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 Classification: L83, D12

Suggested Citation

Coates, Dennis and Humphreys, Brad R. and Zhou, Li, Reference‐Dependent Preferences, Loss Aversion, and Live Game Attendance (July 2014). Economic Inquiry, Vol. 52, Issue 3, pp. 959-973, 2014, Available at SSRN: https://ssrn.com/abstract=2434881 or http://dx.doi.org/10.1111/ecin.12061

Dennis Coates

University of Maryland, Baltimore County ( email )

1000 Hilltop Circle
Baltimore, MD 21250
United States
410-455-3243 (Phone)
410-455-1054 (Fax)

Brad R. Humphreys

West Virginia University - Department of Economics ( email )

Morgantown, WV 26506
United States

Li Zhou

University of Alberta - Department of Economics ( email )

8-14 Tory Building
Edmonton, Alberta T6G 2H4
Canada

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