Which theory states that performance will deteriorate when stress levels reach a certain point, leading to catastrophic failure with high cognitive anxiety and high physiological arousal?

Thom's Catastrophe Theory is a model that explains the relationship between performance and anxiety, particularly focusing on how individuals respond to stress and anxiety in high-pressure situations. According to this theory, as stress levels rise, performance improves up to a certain point. However, once a threshold of anxiety is exceeded, performance can suddenly drop off dramatically, leading to what is referred to as a "catastrophe." This illustrates that both high cognitive anxiety and high physiological arousal can overwhelm an individual's capacity to perform effectively, resulting in a significant decline in performance.

This understanding is particularly important in areas such as sports psychology, performance arts, and other high-stakes environments. Recognizing the critical balance between arousal and performance helps in developing strategies to manage anxiety and improve overall performance outcomes. Thus, the statement accurately encapsulates Thom's Catastrophe Theory, making it the correct choice in the context of the question.