I know what you did last weekend- or do I? Introducing mental anchoring to the demand for sport

Benz, Men-Andri, Leif Brandes () and Egon Franck

No 47, Working Papers from University of Zurich, Institute for Strategy and Business Economics (ISU)

Abstract: Football matches are by no means homogenous goods. Rather, there are big differences in single match quality, which is ex-ante unobservable to consumers. We argue that quality uncertainty leads consumers to search for quality proxies which are observable in advance. Aggregate demand functions are shown to depend merely on prices, ex-ante quality perception and stochastic influence factors. Following the work by Kahneman, Tversky and Slovic, we suggest that consumer behaviour is to some extent driven by mental anchoring. Therefore, the usual approach to rely on absolute measures only, seems doubtful. The main focus of our empirical analysis is to introduce relative quality measures, which are based on different anchor levels. Besides seasonal-dynamic and seasonal-static anchors, this specification allows us to include absolute quality proxies as a special case. Applying median regression on a sample from over 2000 individual matches in the German Bundesliga, we find evidence for mental anchoring in the demand for sport. Our results indicate that consumers tend to compare current values for quality proxies to last season’s indicator values instead of last match’s indicator values.

JEL-codes: C14 C24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-lab and nep-spo
Date: 2006
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Published in: Journal of Sports Economics 2008, Vol. 9, No. 3, pp. 266-286.

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Persistent link: http://EconPapers.repec.org/RePEc:iso:wpaper:0047

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