Short-Run Demand and Uncertainty of Outcome in Major League Baseball

Short-Run Demand and Uncertainty of Outcome in Major League Baseball This article explores the importance of uncertainty in athletic contests. We use a probit model and Monte Carlo simulations to forecast game outcomes in Major League Baseball. Simulations are necessary to understand fully the preferences that consumers have towards uncertainty in sports. We use these simulations to estimate demand using attendance data for regular season games. Our findings show that when game, playoff, and consecutive season uncertainty measures are all included in estimating attendance for individual games, only the metrics that are related to the home team’s standing are significant. These metrics include the change in performance from the previous season and the importance of the game in qualifying for the playoffs. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Short-Run Demand and Uncertainty of Outcome in Major League Baseball

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Publisher
Springer US
Copyright
Copyright © 2010 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-010-9267-3
Publisher site
See Article on Publisher Site

Abstract

This article explores the importance of uncertainty in athletic contests. We use a probit model and Monte Carlo simulations to forecast game outcomes in Major League Baseball. Simulations are necessary to understand fully the preferences that consumers have towards uncertainty in sports. We use these simulations to estimate demand using attendance data for regular season games. Our findings show that when game, playoff, and consecutive season uncertainty measures are all included in estimating attendance for individual games, only the metrics that are related to the home team’s standing are significant. These metrics include the change in performance from the previous season and the importance of the game in qualifying for the playoffs.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 23, 2010

References

  • Demand for sport
    Borland, J.; MacDonald, R.

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