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    Consuming Contests: Outcome Uncertainty and Spectator Demand for Contest-based Entertainment
    17 Mar 2021Working Paper Summaries

    Consuming Contests: Outcome Uncertainty and Spectator Demand for Contest-based Entertainment

    by Patrick J. Ferguson and Karim R. Lakhani
    Analysis of Australian Football League data shows that the uncertainty of game outcomes has a large, positive causal effect on stadium attendance. These findings show how competitive balance is important for contest designers in general and sports leagues in particular.
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    Author Abstract

    Contests that are designed to be consumed for entertainment by non-contestants are a fixture of economic, cultural and political life. In this paper, we examine whether individuals prefer to consume contests that have more uncertain outcomes. We look to professional sports and exploit injury-induced changes to teams' lineups to estimate the effect of outcome uncertainty on spectator demand for contests. Drawing on multiple seasons of game-level data from the Australian Football League, we find that game outcome uncertainty has a large effect: a one standard-deviation increase in the outcome uncertainty of a game causes, on average, an 11.2% increase in attendance. We show that this effect is greater: 1) when there is more at stake on the outcome of the contest; and, 2) for teams that have larger, more-dispersed fan bases. Our results extend research on contest design and information preferences by suggesting that spectators are strongly drawn to evenly-balanced contests, behavior consistent with people deriving entertainment utility from suspense and the resolution of uncertainty.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: February 2021
    • HBS Working Paper Number: 21-087
    • Faculty Unit(s): Technology and Operations Management
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    Karim R. Lakhani
    Karim R. Lakhani
    Dorothy and Michael Hintze Professor of Business Administration
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