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Outcome Uncertainty, Reference-Dependent Preferences and Live Game Attendance

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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File URL: http://www.ualberta.ca/~econwps/2012/wp2012-07.pdf
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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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  10. Daniel, Rascher, 1999. "A Test of the Optimal Positive Production Network Externality in Major League Baseball," MPRA Paper 25832, University Library of Munich, Germany.
  11. Men-Andri Benz & Leif Brandes & Egon Franck, 2006. "Do Soccer Associations Really Spend on a Good Thing? Empirical Evidence on Heterogeneity in the Consumer Response to Match Uncertainty of Outcome," Working Papers 0048, University of Zurich, Institute for Strategy and Business Economics (ISU), revised 2008.
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  15. Robert J. Lemke & Matthew Leonard & Kelebogile Tlhokwane, 2010. "Estimating Attendance at Major League Baseball Games for the 2007 Season," Journal of Sports Economics, , vol. 11(3), pages 316-348, June.
  16. Scott Tainsky & Jason Winfree, 2010. "Short-Run Demand and Uncertainty of Outcome in Major League Baseball," Review of Industrial Organization, Springer, vol. 37(3), pages 197-214, November.
  17. Amemiya, Takeshi, 1973. "Regression Analysis when the Dependent Variable is Truncated Normal," Econometrica, Econometric Society, vol. 41(6), pages 997-1016, November.
  18. Elise M. Beckman & Wenqiang Cai & Rebecca M. Esrock & Robert J. Lemke, 2012. "Explaining Game-to-Game Ticket Sales for Major League Baseball Games Over Time," Journal of Sports Economics, , vol. 13(5), pages 536-553, October.
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  20. Czarnitzki, Dirk & Stadtmann, Georg, 1999. "Uncertainty of outcome versus reputation: empirical evidence for the First German Football Division," ZEW Discussion Papers 99-46, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  21. Peel, David A & Thomas, Dennis A, 1992. "The Demand for Football: Some Evidence on Outcome Uncertainty," Empirical Economics, Springer, vol. 17(2), pages 323-31.
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  23. Dennis Coates & Brad R. Humphreys, 2011. "Game Attendance and Competitive Balance in the National Hockey League," Working Papers 1114, International Association of Sports Economists;North American Association of Sports Economists.
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  25. P. Dorian Owen & Clayton R. Weatherston, 2004. "Uncertainty Of Outcome, Player Quality And Attendance At National Provincial Championship Rugby Union Matches: An Evaluation In Light Of The Competitions Review," Economic Papers, The Economic Society of Australia, vol. 23(4), pages 301-324, December.
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