The Absence of a Sunk Cost Effect in a Long Shot Gamble and Scams

Sam Y. Yu

International Journal of Economics and Finance, 2022, vol. 14, issue 12, 68

Abstract: Why do people fall for scams? This paper presents an experiment about the effect of a sunk cost on unwise decision making. This experiment portrays a scam involved in a long shot gamble. The experiment uses two conditions; one condition hosts the sunk cost effect, and the other without the effect. These two conditions help reveal the fact if a sunk cost effect indeed presents itself in scams. The results of said experiment did not indicate a significant difference between the two conditions, suggesting that a sunk cost effect most likely does not play a big role in scams.

Date: 2022
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