| By: |
Kossuth, Lajos (Warwick Business School);
Powdthavee, Nattavudh (University of Warwick);
Harris, Donna (University of Oxford);
Chater, Nick (Warwick Business School) |
| 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 a lab-in-the-field
experiment, 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. It was, however, associated with
a sharp decrease in people's happiness following an England loss. Post-match
happiness is 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. |
| Keywords: |
hedging, happiness, social identity, wellbeing, world cup, experienced utility |
| JEL: |
I31 |
| Date: |
2019–09 |
| URL: |
http://d.repec.org/n?u=RePEc:iza:izadps:dp12589&r=all |