I'm reminded of a story I heard. Can't remember the source, but basically one player asked another if they would ever fold rockets pre-flop.

The correct answer is that yes - there are times that you should fold even AA pre-flop. When I'm on the bubble or in the money, I always keep the story in mind along with the advice, "Not calling a raise is a SMALL mistake".

First, justification for the folding of AA:
If you are in the money 3 handed:
1st - 20k chips
2nd - 19.5k chips
3rd (you) - 2k chips

1st place takes $50k, 2nd takes $30k and 3rd takes $20k

You are dealt AA in last position and both people go AI before you. By all means, fold your rockets. Even if you win and TRIPLE up, you may have locked in 2nd place but are still hugely short stacked. If you muck the AA, you will either make 2nd by default or be the 2nd chipstack with a 4x advantage over the short stack.

Howard Lederer makes similar points in this article:
http://www.fulltiltpoker.com/proLessons.php?lesson=1
and recommends playing for [generally] the spot just over the bubble. In a sit n go, this is 3rd. Playing for first is the wrong mentality.

My second piece of advice is from [IIRC] Dannenham: "Not calling a raise is a SMALL mistake". If you muck here, I don't know what your stacks look like, but you may be in a great position still. Tourney play is a little different that cash games. In a cash game, calling AA preflop is ALWAYS profitable because you can just buy back in. In a tourney, especially late, being a 60-40 favorite isn't always an automatic AI. If you have a stack to sustain the blinds, you may want to wait until you are a 90-10 favorite before calling someone who has you covered.

Just some thoughts. I'm interested in any criticism of them.