loss aversion | FiT Publishing

Loss Aversion, Reference-Dependent Preferences, and Collective Bargaining Agreements in the National Basketball Association

Candon Johnson

The importance of competitive balance in sports leagues provides a negotiation tactic to leagues and owners when negotiating collective bargaining agreements. This paper provides evidence of loss aversion in National Basketball Association (NBA) game attendance across different collective bargaining agreements. Over time, NBA owners have negotiated policies such as salary caps, maximum salaries, and rookie scale salaries among other devices to increase competitive balance. Competitive balance is often a goal of sports leagues in order to increase demand for attendance, but should...Read more

The Pitfalls of Econometric Tests of the Uncertainty of Outcome Hypothesis: Interdependence of Variables, Imperfect Proxies, and Unstable Parabols

Łukasz Skrok

A substantial number of empirical analyses of attendance at team sports events have been devoted to testing the uncertainty of outcome hypothesis, according to which the interest of fans is positively influenced by the degree of uncertainty of an outcome. The results, however, have turned out to be inconclusive. This article examines a possible explanation based on the flaws of the testing method. I show that results consistent with the uncertainty of outcome hypothesis can be obtained even when attendance is solely determined by the quality of the competing teams. The reason for this is...Read more