Skill-Related Differences in Reference-Dependent Stopping

This paper examines reference-dependent stopping in repeated risky decisionmaking and its relation to skill dependence and individual ability. Using field data from online heads-up poker tournaments, we classify players according to whether they are more likely to stop when ahead (gain-exit behavior) or when behind (stop-loss behavior). Skilled players, relative to less skilled players, are more likely to adopt gain-exit behavior and play more frequently, yet their performance deteriorates during periods of chasing losses. These patterns suggest that skilled individuals may pursue implicit income targets, continuing play until reaching them, which can undermine short-term performance and unintentionally generate left-skewed profit distributions. The findings raise new questions about how skill and perceived control shape behavior in repeated risk-taking, offering insights for other domains such as trading and performance-based work.