Consuming Contests: Outcome Uncertainty and Spectator Demand for Contest-based Entertainment

Abstract

Contests that non-contestants consume for entertainment are a fixture of economic, cultural and political life. We look to professional sports and exploit injury-induced changes to teams' line-ups to examine whether individuals prefer to consume contests that have more uncertain outcomes. Using data from the Australian Football League, we find that a one standard-deviation increase in game outcome uncertainty causes, on average, an 11.2% increase in attendance. Our results extend research on contest design and information preferences by showing that spectators strongly prefer evenly-balanced contests and appear to derive entertainment utility from suspense and the resolution of uncertainty.

Keywords: Contest design, information preferences, consumer demand

JEL Classification: Z20, L82, L83, M55