Goals as Reference Points in Marathon Running: A Novel Test of Reference Dependence

Markle, Alex; Wu, George; White, Rebecca J.; Sackett, Aaron M.

doi:10.2139/ssrn.2523510

Cited by 13 publications

(12 citation statements)

References 87 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…convex below the reference point and concave above it. In line with Markle et al (2014) and Allen et al (2014), our results thus support the transferability of the main properties of the prospect theory value function to goal behavior in the field and suggest a distinct shape of the value function around goals. With this paper we make novel and significant contributions to research in two ways: (1) by providing field evidence for the applicability of the Heath et al (1999) model to predict user performance in the presence of 'mere' goals;…”

Section: Introductionsupporting

confidence: 92%

“…However, they find that the shape of the distribution of the finishing times can be modeled with standard prospect theory parameter estimates. With our paper we complement the work of Markle et al (2014) and Allen et al (2014) by providing field evidence for the applicability of Heath et al's (1999) model to predict user performance in the presence of 'mere' goals. In particular, we answer the following research question: Do individual performance patterns exhibit the main properties of the prospect theory value function (i.e., reference point dependence, loss aversion, and diminishing sensitivity) in the days surrounding 'mere' goal achievement?…”

Section: Introductionmentioning

confidence: 63%

“…However, in order to ensure generalizability of results it is also important to confirm laboratory findings with evidence from the field (Levitt & List 2007). Recently, Markle et al (2014) and Allen et al (2014) were the first to provide evidence for Heath et al's (1999) model in a field environment.…”

Section: Introductionmentioning

confidence: 97%

See 2 more Smart Citations

Goals as Reference Points: Empirical Evidence from a Virtual Reward System

Rechenberg¹,

Gutt²,

Kundisch³

2016

Decision Analysis

View full text Add to dashboard Cite

Heath et al. (1999) propose a prospect theory model for goal behavior which offers insights on how goals affect individual and group performance. Their analytical model is based on the assumption that goals inherit the main properties of the prospect theory value function, i.e., reference point dependence, loss aversion, and diminishing sensitivity. Evidence from laboratory experiments as well as first evidence from the field support this modeling choice. In this paper, we complement this work by investigating whether the main properties of the prospect theory value function transfer to goal behavior in the field. In particular, we analyze how individual performance is affected by the presence of goals. For our research, we take user activity data from a popular German Question & Answer community and analyze how users adjust their contribution behavior in the days surrounding goal achievement, where goals are represented by badges. We find that users gradually increase their performance in the days prior to earning a badge, with performance peaking on the day of the promotion. In subsequent days, user performance gradually diminishes again, with the decline being strongest on the day immediately following the badge achievement. Overall, user performance is higher 2 in the days preceding badge achievement, compared to subsequent days. These findings reflect the characteristic S-shape of the prospect theory value function which is convex below the reference point and concave above it. Our results thus support the transferability of the main properties of the prospect theory value function to goal behavior in the field and suggest a distinct shape of the value function around goals.

show abstract

Section: Introductionsupporting

confidence: 92%

Section: Introductionmentioning

confidence: 63%

See 1 more Smart Citation

Goals as Reference Points: Empirical Evidence from a Virtual Reward System

Rechenberg¹,

Gutt²,

Kundisch³

2016

Decision Analysis

View full text Add to dashboard Cite

show abstract

“…Reference points play an important role in some surprising areas. For example, it has been found that the finishing times of marathon runners bunch around certain reference point times (Allen, Dechow, Pope, & Wu, 2015;Markle, Wu, White, & Sacket, 2015).…”

Section: Analog Processing Explanation For Ldementioning

confidence: 99%

The prospect of a perfect ending: Loss aversion and the round-number bias

Fraser-Mackenzie

Sung

Johnson

2015

Organizational Behavior and Human Decision Processes

View full text Add to dashboard Cite

Studies across a range of domains have shown that individuals tend to focus on round numbers as cognitive reference points; a so-called left-digit effect. We explain this effect by combining analog numerical heuristics with prospect theory in order to develop an analog value function that predicts the key characteristics of the left-digit effect. Most importantly, this value function predicts an unreported phenomenon, namely; that the left-digit effect will be more pronounced in situations involving losses (cf. gains). We confirm this prediction in both a laboratory experiment regarding hypothetical investments and analysis of buy-sell imbalances in over 15 million trades by investors in a financial market. We conclude that our analog value function is a promising explanation for the left-digit effect. Furthermore, we suggest that interventions aimed at reducing costly buy-sell imbalances in financial markets should focus on the decisions made by investors when they are facing loss. IntroductionResearch has revealed that small changes in prices can significantly influence individuals' perceptions of an item's cost. The left-digit effect (LDE) or "pricing in the nines" (Basu, 1997;Stiving, 2000) occurs when two prices that differ by 1 cent (e.g., $2.99 vs. $3.00) are encoded differently in the perceiver's mind due to differences in their left digits. This has clear applications in the pricing of commercial goods and services (Manning & Sprott, 2009;Stiving, 2000; Thomas & Morwitz, 2005). However, recent studies suggest that the LDE could play a role in a broad range of decision-making domains (e.g., in financial markets, see Bhattacharya, Holden, & Jacobsen, 2012). In light of the importance of this phenomenon, we develop a theory to explain the observed LDE. In particular, we combine dual-process theories of numerical processing during the encoding of price information (Gordon, 2004;Lemer, Dehance, Spelke, & Cohen, 2003) and prospect theory's value function (Kahneman & Tversky, 1979; Tversky & Kahneman, 1992) to develop a new analog value function.The analog value function is based on two ideas: (1) individuals may use changes in leftdigits to inform their judgment of changes in value; and (2) changes in left-digits will bias choices more readily in situations involving losses than in situations involving gains. Under the dual-process paradigm, the use of simple left-digit heuristics implies a reliance on intuitive type 1 processing rather than the more deliberative type 2 processing associated with calculating the precise change in value (Evans & Stanovich, 2013a, Hogarth, 2001 Kahneman & Frederick, 2002;Payne, Bettman, & Johnson, 1993;Sloman, 1996;Stanovich & West, 2000). However, our theory is not based on the premise that there must be a change in reasoning strategy from more normative in the context of gains to heuristic in the context of losses. Rather, we consider prospect theory and propose that the salience of left-digit changes may be exaggerated by loss aversion. The higher salience of l...

show abstract

“…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 (), Corgnet et al (, ), Dalton et al (), Koch and Nafziger (), Markle et al (), and Uetake and Yang (), and for experimental studies about goal setting with university students, see e.g., Clark et al (), Dobronyi et al (), and Van Lent and Souverijn (). In Van Lent and Souverijn () goals are set during one‐on‐one interviews between students and their randomly assigned mentor.…”

Section: Introductionmentioning

confidence: 99%

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

Lent

2019

German Economic Review

View full text Add to dashboard Cite

People typically set goals in settings where they cannot be sure of how they will perform, but where their performance is revealed to them in parts over time. When part of the uncertainty is resolved, initial goals may have turned out to be unrealistic and hence they no longer work as a motivation device. Revising goals may increase performance by making goals realistic, but may also adversely affect performance through reduced goal commitment. We study the effects of motivating university students to set goals and inviting them to revise their goals later, using a field experiment involving nearly 2,100 students. We use courses containing two midterms and a final exam, where midterms reduce uncertainty about students’ potential performance. We find that motivating students to set goals does not affect performance on average. Students with midterm grades lower than their goal, decrease their performance. This effect is driven by students who were motivated to set goals without being made aware that they can revise their goals later. This finding may help explain why the evidence of the effectiveness of goals on study performance is mixed.

show abstract

Goals as Reference Points in Marathon Running: A Novel Test of Reference Dependence

Cited by 13 publications

References 87 publications

Goals as Reference Points: Empirical Evidence from a Virtual Reward System

Goals as Reference Points: Empirical Evidence from a Virtual Reward System

The prospect of a perfect ending: Loss aversion and the round-number bias

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

Contact Info

Product

Resources

About