International Journal of

Business & Management Studies

ISSN 2694-1430 (Print), ISSN 2694-1449 (Online)
Does the Combination of Experience and Strong Incentives Eliminate Loss Aversion? -- Evidence from the 2019 and 2020 U.S. Open and Masters Golf Tournaments Indicates It Does Not


Perhaps the biggest caveats with respect to the perceived robustness of loss aversion in real-world decision making are findings that with repeated decisions and high stakes loss aversion goes away as decision makers learn from experience.  The study reported herein shows that this is not necessarily the case.

This within-subjects study tracked individual player-performance, longitudinally, over their competitive rounds at the 2019 and 2020 U.S. Open and Masters golf tournaments. These were the world’s most elite players competing for the highest stakes in golf, highly incentivized to perform familiar activities that they have honed through a lifetime of practice and competition. Yet loss aversion was induced by the negative-framing that occurred naturally following scores of bogey-or-worse during their competitive rounds.

With a change in reference point after making bogeys, players made a significantly higher rate of birdies on the ensuing hole. In golf folklore this loss-aversion phenomenon is known as the bounce-back effect. And the results here are clear: neither experience nor high stakes eliminate loss aversion