Signing Bonus Required to Eliminate the Risk of Missing College

Abstract

Although going to college is assumed to only be a cost, it can also be viewed as an investment. For four years, people invest in a university in anticipation for a return upon graduation of a larger salary. With that in mind, high school baseball players with immense talent face the choice of two investments: the high risk, high return investment of entering into professional baseball and the low risk, moderate return investment of college. In this study, the amount of money that makes the risk of entering professional baseball equal the risk of going to college, which makes both options suitable, is determined.