Perceived game uncertainty and suspense: A test of the uncertainty of outcome hypothesis using a stated preference approach

Abstract

The Uncertainty of Outcome Hypothesis (UOH), a core topic in sports economics literature for more than six decades, posits that fans’ interest in (and consequently the demand for) a sports contest increases the more uncertain its outcome is expected to be. Nevertheless, despite the theoretical relevance of the UOH and its prominence as justification for interventions aiming to maintain or improve the level of competitive balance (CB) within leagues, decades of research have struggled to provide clear evidence on its empirical relevance. This motivated two distinct lines of research which based on behavioural economic concepts provide valuable insights on possible reasons behind this lack of clear evidence. The first line builds upon the idea that fans’ subjective evaluations of uncertainty and suspense might deviate from ‘objective’ measures and elaborates on behavioural anomalies that might cause such a divergence. The second line draws on the prospect theory and the concept of reference-dependent preferences combined with loss aversion in order to provide for the first time a consistent theoretical model that can explain fans preferences for close contests as well as for games involving a favourite.

This dissertation draws upon the two aforementioned lines and endeavours to bridge between different behavioural economic explanations on the (ir)relevance of the UOH. To do so, the herein presented studies rely on a stated preference approach, develop realistic consumption scenarios and test the UOH using individually weighted evaluations of uncertainty and suspense. The aims, amongst others, are: (i) to study the concept of perceived game suspense in single-game settings and the presence of behavioural anomalies in this regard; (ii) to develop a measure of perceived game uncertainty that is comparable to objective measures and examine its relation with perceived game suspense; (iii) to provide insights on whether the finding that fans’ preferences for game uncertainty are dominated by loss aversion emerges also in stated preference settings; (iv) to provide empirical evidence on the role of supporter status, type of games and consumption modes in the analysis of the UOH, as well as to extend its examination to between-country settings in order to study potential cross-continental differences in game uncertainty preferences as suggested by the literature.

Econometric findings reveal, amongst others, that: (i) perceived game suspense is positively related to the demand for soccer events, pointing towards the presence of a “satisficing” threshold in the context of in-stadium attendance; (ii) fans do not perceive game uncertainty differently than how economists have tended to measure it, however, it is shown that the concepts of perceived game uncertainty and suspense are distinct from each other, with the latter being more likely to proxy quality-related aspects and match relevance; (iii) the demand for live soccer telecasts increases when fans expect a certain home or away team win, which could be explained by fans exhibiting loss aversion with regard to game uncertainty; (iv) this relation remains both in within- and between-country settings, independently of supporter status and/or the type of games, while the consumption mode seems to affect the predictions.