Reference-Dependent Preferences: Evidence from Marathon Runners

Eric J. Allen (), Patricia M. Dechow (), Devin G. Pope () and George Wu ()
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Eric J. Allen: Marshall School of Business, University of Southern California, Los Angeles, California 90089
Patricia M. Dechow: Haas School of Business, University of California, Berkeley, Berkeley, California 94705
Devin G. Pope: Booth School of Business, University of Chicago, Chicago, Illinois 60637
George Wu: Booth School of Business, University of Chicago, Chicago, Illinois 60637

Management Science, 2017, vol. 63, issue 6, 1657-1672

Abstract: Theories of reference-dependent preferences propose that individuals evaluate outcomes as gains or losses relative to a neutral reference point. We test for reference dependence in a large data set of marathon finishing times ( n = 9,789,093). Models of reference-dependent preferences such as prospect theory predict bunching of finishing times at reference points. We provide visual and statistical evidence that round numbers (e.g., a four-hour marathon) serve as reference points in this environment and as a result produce significant bunching of performance at these round numbers. Bunching is driven by planning and adjustments in effort provision near the finish line and cannot be explained by explicit rewards (e.g., qualifying for the Boston Marathon), peer effects, or institutional features (e.g., pacesetters).

Keywords: reference dependence; prospect theory; loss aversion; bunching; effort provision (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (85)

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