Working Paper: NBER ID: w20343
Authors: Eric J. Allen; Patricia M. Dechow; Devin G. Pope; George Wu
Abstract: Models 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 dataset of marathon finishing times (n = 9,524,071). 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). We calibrate a simple model of prospect theory as well as other models of reference dependence and show that the basic qualitative shape of the empirical distribution of finishing times is consistent with parameters that have previously been estimated in the laboratory.
Keywords: Reference-Dependent Preferences; Marathon Performance; Behavioral Economics
JEL Codes: D03; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Marathon finishing times (C41) | Bunching at round number reference points (E32) |
| Runners adjust their effort to finish just under round number reference points (D29) | Marathon finishing times exhibit significant bunching at round number reference points (C41) |
| Runners close to achieving round number reference points are more likely to speed up in the final stretch (C92) | Marathon finishing times exhibit significant bunching at round number reference points (C41) |
| Runners may spontaneously adopt new reference points during the race (J62) | Shift in pacing strategy (C69) |