When to Walk Away and When to Risk It All

While one might expect athletes to be strongly averse to extending their career too long when there is a chance of losing everything due to a concussion or a catastrophic injury, experimental subjects consistently played longer than the optimal amount for risk-neutral decisions. A commitment to the length of play in advance, as in the case of long-term contracts, led to a greater chance of staying beyond the expected payoff-maximizing point. If the decision frame is altered so that decisions are made in each period rather than through an upfront commitment, the magnitude of potential losses is more evident.