When Falling Just Short is a Good Thing: The Effect of Past Performance on Improvement

29 Pages Posted: 28 Dec 2018 Last revised: 14 Jan 2019

See all articles by Mariya (Maria) Burdina

Mariya (Maria) Burdina

University of Central Oklahoma

R. Scott Hiller

Fairfield University - Department of Economics

Date Written: January 10, 2019

Abstract

Models of reference-dependent preferences show that an individual’s utility depends on the difference between the outcome and a ‘neutral’ reference point. Our paper investigates how distance from reference points affects future performance. We find that round numbers and personal bests motivate runners, and that missing the goal by a small amount improves future performance. For those who achieve their goal, future performance suffers slightly. In empirical analysis, we use an extensive panel of marathon data, which contains a past running history for every runner in our sample and allows us to estimate runner's ability and experience.

Keywords: reference dependence, round numbers, performance, marathons

JEL Classification: D84, J22, L83

Suggested Citation

Burdina, Mariya (Maria) and Hiller, R. Scott, When Falling Just Short is a Good Thing: The Effect of Past Performance on Improvement (January 10, 2019). Available at SSRN: https://ssrn.com/abstract=3300149 or http://dx.doi.org/10.2139/ssrn.3300149

Mariya (Maria) Burdina

University of Central Oklahoma ( email )

100 North University Drive
Edmond, OK 73034
United States

R. Scott Hiller (Contact Author)

Fairfield University - Department of Economics ( email )

Fairfield, CT 06824
United States

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