When Falling Just Short is a Good Thing : The Effect of Past Performance on Improvement

Models of reference-dependent preferences show that an individual's utility depends on the difference between the outcome and a ‘neutral' reference point. Our paper investigates how distance from reference points affects future performance. We find that round numbers and personal bests motivate runners, and that missing the goal by a small amount improves future performance. For those who achieve their goal, future performance suffers slightly. In empirical analysis, we use an extensive panel of marathon data, which contains a past running history for every runner in our sample and allows us to estimate runner's ability and experience