Loss Aversion in Professional Golf

Abstract

We examine loss aversion in the context of professional golf at US Open tournaments. In particular, we analyze data from two courses, Pebble Beach Golf Links and Oakmont Country Club, where they have hosted six and five US Opens, respectively. The United States Golf Association changed the par rating of a hole on each course from a par 5 to a par 4, without fundamentally altering the hole, in each US Open hosted by these courses since 2000. In this natural experimental setting, we find evidence of significant loss-aversive behavior in the world’s best golfers based solely on par rating.

Study on the Application of Behavior Change Techniques Classification

“…Here, two techniques for improving abilities will be introduced as examples: "goal-setting technique" focuses on behavioral change goals. According to a recent study published by Ryan Elmore's team from the University of Denver [15], under the same objective conditions such as the venue, lowering the golf score standard from 5 strokes to 4 strokes, which means one less chance to hit the ball into the hole, can help professional players perform better in tournaments. When we change the goal from "finishing the game" to "hitting the ball harder", the scores improve, indicating that higher goals lead to better performance.…”

Golf as an Innovation in the Teaching of Finance: Report on a Pioneering Experience

“…Decision-making under risk situations, the need to prepare for situations that pose difficulties to the intended objective, and the need to construct and employ rules of engagement for such situations seem to be common between golf and corporate decisionmaking. In finance, behavioral approaches (and their respective extensions and applications) seem to have explicit connections with the golf environment (Elmore & Urbaczewski, 2021;Pope & Schweitzer, 2011). According to Knutsen et al (2017), a golfer's unwanted decisions in the context of the game are mainly rooted in three errors of judgment: overoptimism (Montier, 1983), overconfidence (Montier, 1983) and the illusion of control (Gilovich et al, 1985).…”

“…Risk management is present both in the game of golf and in financial decisions. In particular, risk and loss aversion on the part of the individual in charge of the decision are present in both contexts (Elmore & Urbaczewski, 2021). An illustration of the context in which the golfer may end up deciding their playing strategy is shown in Table 3.…”

Golfe como Inovação no Ensino de Finanças: Relato de uma Experiência Pioneira

“…Situações de decisão sob risco, a necessidade de preparação prévia para situações que tragam dificuldades ao objetivo intencionado, assim como a necessidade de construir e empregar regras de engajamento para tais situações, parecem algo comum entre golfe e decisões corporativas. Em finanças, abordagens comportamentais (e suas respectivas extensões e aplicações) parecem ter conexões explícitas com o ambiente do golfe (Elmore & Urbaczewski, 2021;Pope & Schweitzer, 2011). Conforme Knutsen et al (2017), decisões indesejadas por parte do golfista em contexto de jogo teriam raízes principalmente em três erros de julgamento: excesso de otimismo (Montier, 1983), excesso de confiança (Montier, 1983) e ilusão de controle (Gilovich et al, 1985).…”

“…A gestão de riscos está presente tanto no jogo de golfe como em decisões financeiras. Em específico, a aversão ao risco e à perda por parte do indivíduo encarregado da decisão se faz presente nesses dois contextos (Elmore & Urbaczewski, 2021). Uma ilustração do contexto sob o qual o golfista pode acabar decidindo sua estratégia de jogo está na Tabela 3.…”