Abstract:

Professional esports athletes offer a natural setting for studying decision-making under extreme uncertainty. Careers are short, incomes are highly volatile, and career-ending events can occur without warning. As a result, the allocation problems they face differ fundamentally from those in traditional labor markets. In this talk, we discuss how a fixed insurance premium can be allocated between pension savings and education insurance. We begin with a behavioral perspective, focusing on how career uncertainty and risk perception shape intuitive allocation choices. We then introduce a simple mathematical framework, based on expected utility and lifecycle considerations, to formalize these trade-offs. Under some assumptions, we argue that the optimal allocation tends to exhibit bang–bang behavior, with solutions concentrating at the boundary of the feasible set rather than at interior optima. This structural tendency highlights the tension between flexibility and security in insurance design and helps explain the all-or-nothing allocation behavior often observed in practice.