Golfer Risk Aversion
How much does risk aversion cost professional golfers?
It turns out that it is a lot easier for the best golfers in the world to sink a putt for par than one for birdie, even if the putts are exactly the same. Why?
Even the world’s best pros are so consumed with avoiding bogeys that they make putts for birdie discernibly less often than identical-length putts for par, according to a coming paper by two professors at the University of Pennsylvania’s Wharton School. After analyzing laser-precise data on more than 1.6 million Tour putts, they estimated that this preference for avoiding a negative (bogey) more than gaining an equal positive (birdie) — known in economics as loss aversion — costs the average pro about one stroke per 72-hole tournament, and the top 20 golfers about $1.2 million in prize money a year.
Because no extra stroke is better than another, this is fundamentally irrational behavior, but the tendency was remarkably consistent for every golfer on the tour.
