Does Learning Economics Make You Less Susceptible to the Sunk Cost Fallacy?

Stefani Milovanska-Farrington () and Dirk Mateer ()
Additional contact information
Stefani Milovanska-Farrington: The University of Tampa
Dirk Mateer: University of Texas at Austin

No 17639, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The sunk cost fallacy is typically covered in introductory economics courses. It is among the most important biases that influence decision making. Ronayne et al. (2021a,b) find evidence of behavior consistent with the sunk cost effect and utilize eight questions that measure individuals' susceptibility to the sunk cost fallacy. We extend their research by examining whether a "pop culture" teaching intervention in principles of microeconomics lowers students' predisposition to the fallacy. We find that students become -14.95% less susceptible to the sunk cost fallacy after learning about it. We also observe that students who have taken economics previously exhibit lower susceptibility in all time periods.

Keywords: controlled experiment; empirical test; introductory economics; sunk cost fallacy; teaching economics (search for similar items in EconPapers)
JEL-codes: A20 A22 I21 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2025-01
New Economics Papers: this item is included in nep-cbe and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/dp17639.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp17639

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().