How Loss Aversion impacts performance

Whether a golfer, soccer player or tennis star, professional sportsmen hate to lose. That's obvious. But did you know that athletes actually perform better in situations where they are striving to avoid defeat, rather than if they were just aiming to win?

The psychology behind this "loss aversion" is simple: humans hate to have things taken away from them. As such, if an outcome is framed as "losing", sportsmen and women will perform extra-hard to avoid it. There's been a lot of research on the subject, but one the most potent real-world examples is on the PGA Tour, which demonstrates the effect of loss aversion on professional golfers.

After studying 2,525,161 putts from the PGA Tour between 2004 and 2009, researchers Devin Pope and Maurice Schweitzer observed that a disproportionate number of putts for par were completed compared with attempts for a birdie. A huge 82.9% of putts for par were successfully completed, while just 28.3% birdie attempts were sunk.

Of course, not all putts are equal, and it's likely that many of the birdie attempts were from more difficult distances than the par attempts. However, even when the researchers averaged-out the distances, golfers still putted 3.7% more shots for par than for birdies. But why?

The researchers theorised that loss aversion must play a part. While both situations - missing a birdie and missing a par putt - mean that the player is one shot worse-off, psychologically, sinking a birdie will always be considered as "winning" a point - putting the golfer one-under. A bogey will always be seen as losing a point (one-over), and therefore the golfers seem to up their game for losing situations.

Loss aversion also leads to another golf-specific issue. Player's birdie putts - when missed - tend to go short, putting them in a more advantageous position should they miss the hole. Over-hitting risks putting the player in a position that could be even worse.

Loss aversion for other sports

Loss aversion is easily quantifiable in golf, but it's also a phenomenon that can have a big impact on a variety of sports and situations. An obvious example is towards the end of soccer matches.

If a team is winning, they tend to become more defensive towards the end of a game, rather than try to attack to extend their lead. This happens despite the fact that league structures reward teams who score more (goal differences) or in two-legged ties where aggregate scores can prove vital.

To some extent, it also goes in the face of common sense - teams who have been performing well alter their tactics, despite their original strategy giving them the advantage to begin with.

The change in tactic can be attributed to human heuristic called endowment theory. Endowment theory states that a person - or in this case, a team - becomes even more loss averse when they have already gained something. Therefore because teams start games at 0-0, when they score a goal (or are endowed with it), they reframe the match in the new terms.

Considering their 1-0 advantage, the team's desire to score more goals lessens, because a win and two goals is only marginally more valuable than a win and one goal, but both are worth more than a draw,

Loss aversion could also explain the tactics employed in the first leg of a two-legged tie. Away teams tend to approach the game defensively, opting to counter-attack, while home teams strive to avoid conceding an away goal, which is valued at more than a home one.

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