Reference-Dependent Preferences Under High Stakes and Experience: Evidence from the Australian Open

35 Pages Posted: 7 Aug 2019

See all articles by Diego Puente M.

Diego Puente M.

University of Technology Sydney (UTS; Australian National University (ANU)

Date Written: February 14, 2019

Abstract

I study tennis players’ risk-taking behaviour during the 2016 Australian Open. Using spatial features from a proprietary dataset, I estimate a measure of player aggressiveness and find that players shift their risk-taking preferences depending on whether they are behind or ahead in the game-score. These findings are consistent with the axiom of reference- dependent preferences put forward by Prospect Theory. I also show that, other things equal, the probability of winning a point is increasing on shot aggressiveness. Considering the fact that aggressiveness changes with the game-score, this result suggests players could be performing sub-optimally under specific game situations. I therefore provide evidence of reference-dependent preferences and a potential behavioural bias in a context of high competition and experience.

Keywords: prospect theory, loss aversion, risk-taking, tennis

JEL Classification: D03, D81, Z20

Suggested Citation

Puente Moncayo, Diego, Reference-Dependent Preferences Under High Stakes and Experience: Evidence from the Australian Open (February 14, 2019). Available at SSRN: https://ssrn.com/abstract=3431623 or http://dx.doi.org/10.2139/ssrn.3431623

Diego Puente Moncayo (Contact Author)

University of Technology Sydney (UTS ( email )

15 Broadway, Ultimo
PO Box 123
Sydney, NSW 2007
Australia

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601
Australia

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