Searching for the sunk cost fallacy

Daniel Friedman, Kai Pommerenke, Rajan Lukose, Garrett Milam and Bernardo Huberman

Experimental Economics, 2007, vol. 10, issue 1, 79-104

Abstract: We seek to isolate in the laboratory factors that encourage and discourage the sunk cost fallacy. Subjects play a computer game in which they decide whether to keep digging for treasure on an island or to sink a cost (which will turn out to be either high or low) to move to another island. The research hypothesis is that subjects will stay longer on islands that were more costly to find. Eleven treatment variables are considered, e.g. alternative visual displays, whether the treasure value of an island is shown on arrival or discovered by trial and error, and alternative parameters for sunk costs. The data reveal a surprisingly small sunk cost effect that is generally insensitive to the proposed psychological drivers. Copyright Economic Science Association 2007

Keywords: Sunk costs; Sunk cost fallacy; Search; Self-justification; Loss aversion (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (64)

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Related works:
Working Paper: Searching for the Sunk Cost Fallacy (2004)
Working Paper: Searching for the Sunk Cost Fallacy (2004)
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DOI: 10.1007/s10683-006-9134-0

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