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Does it pay to bet on your favourite to win? Evidence on experienced utility from the 2018 FIFA World Cup experiment

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  • Kossuth, Lajos
  • Powdthavee, Nattavudh
  • Harris, Donna
  • Chater, Nick

Abstract

This paper examined whether people gained significant emotional benefits from not engaging in emotional hedging – betting against the occurrence of desired outcomes. Using the 2018 FIFA World Cup as the setting for our exploratory study, we found substantial reluctance among England supporters to bet against the success of the England football team in the tournament. This decision not to offset a potential loss through hedging did not pay off in people's happiness following an England win. However, it was associated with a sharp decrease in people's happiness following an England loss, which was a similar experience among subjects who were randomly assigned to bet for an England win. Post-match happiness was relatively more stable among those who chose to hedge or were randomly allocated to hedge. We conclude that people do not hedge enough partly because they tend to overestimate the expected diagnostic cost of betting against their social identity, while underestimate the negative emotional impact from betting on their favourite to win when they did not win.

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  • Kossuth, Lajos & Powdthavee, Nattavudh & Harris, Donna & Chater, Nick, 2020. "Does it pay to bet on your favourite to win? Evidence on experienced utility from the 2018 FIFA World Cup experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 35-58.
    • Handle: RePEc:eee:jeborg:v:171:y:2020:i:c:p:35-58
    DOI: 10.1016/j.jebo.2020.01.006
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    2. Adam Brandenburger & Paolo Ghirardato & Daniele Pennesi & Lorenzo Stanca, 2024. "Event Valence and Subjective Probability," Carlo Alberto Notebooks 717 JEL Classification: D, Collegio Carlo Alberto.

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    More about this item

    Keywords

    Hedging; Happiness; Social identity; Wellbeing; World cup; Experienced utility;
    All these keywords.

    JEL classification:

    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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