When to Walk Away and When to Risk It All

43 Pages Posted: 13 Feb 2020

See all articles by Scott DeAngelis

Scott DeAngelis

Robinson, Bradshaw & Hinson, P.A.

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - College of Arts and Science - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Date Written: February 10, 2020

Abstract

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.

Keywords: Risk, concussion, loss aversion, framing, commitment, long-term contracts

JEL Classification: D91, D80, C91

Suggested Citation

DeAngelis, Scott and Viscusi, W. Kip, When to Walk Away and When to Risk It All (February 10, 2020). Vanderbilt Law Research Paper No. 20-10, Available at SSRN: https://ssrn.com/abstract=3536635 or http://dx.doi.org/10.2139/ssrn.3536635

Scott DeAngelis

Robinson, Bradshaw & Hinson, P.A. ( email )

101 North Tryon St.
Suite 1900
Charlotte, NC 28246
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W. Kip Viscusi (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-343-7715 (Phone)
615-322-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/bio/?pid=w-kip-viscusi

National Bureau of Economic Research (NBER)

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Vanderbilt University - College of Arts and Science - Department of Economics

Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://as.vanderbilt.edu/economics/bio/wkip-viscusi/

Vanderbilt University - Owen Graduate School of Management

401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://business.vanderbilt.edu/bio/w-kip-viscusi/

Vanderbilt University - Strategy and Business Economics

Nashville, TN 37203
United States

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