Outcome Uncertainty, Fan Travel, and Aggregate Attendance
8 Pages Posted: 28 Dec 2016
Date Written: December 20, 2016
The classical Uncertainty of Outcome Hypothesis (UOH) informs economists’ understanding consumer decisions to attend sporting events and models of team revenue generation. Coates, Humphreys and Zhou (2014) developed a reference dependent preference based consumer choice model under uncertainty to motivate the UOH in which loss-averse consumers prefer games with certain outcomes. We develop an alternative model based on a standard expected utility model of fan behavior which incorporates fans’ decisions to travel to away games and aggregates decisions across local and visiting fans. This model generates predictions consistent with the classical UOH and concave team and league-wide total revenue functions.
Keywords: outcome uncertainty, game attendance, aggregation, travel
JEL Classification: L83, D12, Z20
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