Goals as reference points in marathon running: A novel test of reference dependence

Abstract

In a large-scale field study of marathon runners, we test whether goals act as reference points in shaping the valuation of outcomes. Theories of reference-dependent preferences, such as Prospect Theory, imply that outcomes that are just below or just above a reference point are evaluated differently. Consistent with the Prospect Theory value function, we find that satisfaction as a function of relative performance (the difference between a runner's finishing time goal and her actual finishing time) exhibits loss aversion and diminishing sensitivity in both predictions of and actual experienced satisfaction. However, in contrast to Prospect Theory, we observe that loss aversion is partially driven by a discontinuity or jump at the reference point. In addition, we find that a runner's time goal as well as their previous marathon times simultaneously impact runner satisfaction, providing support for the impact of multiple reference points on satisfaction.

Multiple Goals as Reference Points: One Failure Makes Everything Else Feel Worse

“…First, multiple goals can occur on a single variable. Markle et al (2018) demonstrated how satisfaction for running times was influenced by multiple time goals, including best finish times, personal goals, and most recent finishes. In another example, corporate investment decisions of managers were influenced by the company's current performance and its target performance (Sullivan and Kida 1995).…”

“…Goals function as reference points in a manner consistent with prospect theory's value function (Heath et al 1999). For example, Markle et al (2018) asked marathon runners to forecast or report their satisfaction with exceeding or falling short of their goals for a race. Predicted and actual satisfaction were both consistent with loss aversion and diminishing sensitivity.…”

A Review of Researches on the Influence of Reference Points on Newsvendor Behavior Decision

“…In a series of laboratory studies, Heath et al (1999) proposed that the goal can be used as a reference point, proving that the characteristics of the value function of the prospect theory can explain the effort and satisfaction of the goal reference point in completing the task, and also found the support of diminishing sensitivity, which means that changes closer to the goal have a greater impact than changes farther from the goal. In a large-scale field study of marathon runners, Markle et al (2018) found that the goal was to serve as a reference point to form the final utility of the contestants. They asked marathon runners to predict or report their satisfaction with the goals above or below the competition.…”

“…The first is to set multiple goals in a variable. For example,Markle et al (2018) proved the effect of multiple goals on running time satisfaction, including optimal completion Y. Y. Su, L. Y. Xiong time, personal goals, and recent completion.…”

Goal Setting, Information, and Goal Revision: A Field Experiment

“…In addition to the economic theory literature, there is an increasing number of empirical studies investigating the effects of goal setting on performance in the laboratory and in the field. See for instance Brookins et al (2017), Corgnet et al (2015Corgnet et al ( , 2018, Dalton et al (2016), Koch and Nafziger (2017), Markle et al (2018), and Uetake and Yang (2018), and for experimental studies about goal setting with university students, see e.g., Clark et al (2018), Dobronyi et al (2017), andVan Lent andSouverijn (2017). In Van Lent and Souverijn (2017) goals are set during one-on-one interviews between students and their randomly assigned mentor.…”