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Outcome Uncertainty, Reference-Dependent Preferences and Live Game Attendance

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Author Info

  • Coates, Dennis

    ()
    (Dept of Economics, UMBC)

  • Humphreys, Brad

    ()
    (University of Alberta, Department of Economics)

  • Zhou, Li

    ()
    (University of Alberta, Department of Economics)

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 fan’s 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.

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Bibliographic Info

Paper provided by University of Alberta, Department of Economics in its series Working Papers with number 2012-7.

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Length: 27 pages
Date of creation: 03 Apr 2012
Date of revision:
Handle: RePEc:ris:albaec:2012_007

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Keywords: uncertainty of outcome hypothesis; attendance demand; prospect theory;

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References

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  1. Peel, David A & Thomas, Dennis A, 1988. "Outcome Uncertainty and the Demand for Football: An Analysis of Match Attendances in the English Football League," Scottish Journal of Political Economy, Scottish Economic Society, vol. 35(3), pages 242-49, August.
  2. Vincent P Crawford & Juanjuan Meng, 2008. "New York City Cabdrivers’ Labor Supply Revisited: Reference-Dependent Preferences with Rational-Expectations Targets for Hours and Income," Levine's Working Paper Archive 122247000000002281, David K. Levine.
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Citations

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Cited by:
  1. Pawlowski, Tim & Budzinski, Oliver, 2014. "Competitive balance and attention level effects: Theoretical considerations and preliminary evidence," Ilmenau Economics Discussion Papers 84, Ilmenau University of Technology, Institute of Economics.
  2. Budzinski, Oliver, 2014. "The competition economics of financial fair play," Ilmenau Economics Discussion Papers 85, Ilmenau University of Technology, Institute of Economics.
  3. Łukasz Skrok, 2013. "Liczba widzów na meczach polskiej ekstraklasy piłki nożnej - metoda szacowania poziomu sportowego drużyn," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 30, pages 273-290.

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