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Outcome Uncertainty, Reference-Dependent Preferences and Live Game Attendance

Author

Listed:
  • 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.

Suggested Citation

  • Coates, Dennis & Humphreys, Brad & Zhou, Li, 2012. "Outcome Uncertainty, Reference-Dependent Preferences and Live Game Attendance," Working Papers 2012-7, University of Alberta, Department of Economics.
  • Handle: RePEc:ris:albaec:2012_007
    as

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    File URL: https://sites.ualberta.ca/~econwps/2012/wp2012-07.pdf
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    References listed on IDEAS

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    Cited by:

    1. Budzinski, Oliver & Pawlowski, Tim, 2014. "The behavioural economics of competitive balance: Implications for league policy and championship management," Ilmenau Economics Discussion Papers 89, Ilmenau University of Technology, Institute of Economics.
    2. 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.
    3. Budzinski, Oliver, 2014. "The competition economics of financial fair play," Ilmenau Economics Discussion Papers 85, Ilmenau University of Technology, Institute of Economics.
    4. 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.
    5. Budzinski, Oliver, 2017. "Sind Wettbewerbe im Profisport Rattenrennen?," Ilmenau Economics Discussion Papers 104, Ilmenau University of Technology, Institute of Economics.

    More about this item

    Keywords

    uncertainty of outcome hypothesis; attendance demand; prospect theory;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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