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

Abstract

Theories of reference-dependent preferences, such as Prospect Theory, imply that outcomes that are just below or just above a reference point are evaluated in a qualitatively distinct fashion. In a large-scale eld study of marathon runners, we test whether goals act as reference points in shaping the valuation of outcomes. Consistent with the Prospect Theory value function, we nd that satisfaction as a function of relative performance (the dierence between a runner’s time goal and her nishing time) exhibits loss aversion and diminishing sensitivity in both predictions of and actual experienced satisfaction. However, in contrast to the standard accounts of reference dependence, we observe that loss aversion is partially driven by a discontinuity or jump at the reference point. In addition, loss aversion is moderated by goal importance, with higher goal importance producing more loss aversion. Finally, we nd 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.