Little is known about the relationship between nominal illusion and loss aversion. In this paper, we took advantage of a unique setting that creates nominal illusion among professionals who see themselves farther from the reference point than they actually are. More specifically, we investigate ski jumping competitions where before the 2017-18 season, the nominal rank in the qualification event was better than the real entry rank to the main competition. Starting from the 2017-18 season, these nominal and real pre-event ranks became identical. Our regression discontinuity analyses show that only after the change, athletes with pre-event ranks close to an elimination cutoff performed in accordance with loss aversion. No such effect was observed before the rule change when the difference between nominal and real ranks made the reference point less salient. We also discuss managerial implications of our findings regarding effort provision in competitive settings.
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