Sunk Cost,Emotion, and Commitment to Education

The influence of prior, irretrievable, investment (sunk cost) on commitment to a course of education was investigated. The moderating effects of the emotions of anger and fear over this commitment decision were also investigated. A total of 425 participants (214 male) with a mean age of 19.92 years were recruited from an undergraduate population. A computer program simulated the process of arranging to undertake a course of education. Participants were induced to feel either anger or fear and, then, invested one of three amounts of sunk cost (under budget, on budget, or over budget) to signing up for a course. Participants then decided how much time they wished to commit to this course or to an alternative, identical course with a better chance of success. Results revealed a significant sunk cost effect of prior investment on commitment to a course of education. Results also revealed that anger increased the magnitude of this sunk cost effect. Results did not reveal any effect of fear on the sunk cost effect. Theoretical implications and practical applications were discussed.     

Sunk Cost and Commitment to Dates Arranged Online

The influence of prior, irretrievable, investment (sunk cost) on commitment to a date arranged online was investigated. Participants were recruited from an undergraduate population. There were 145 participants (86 female) with a mean age of 19.42 years. Participants took part in a computer simulation of the process of arranging a date online. Participants invested one of five amounts of sunk cost into this process. Participants were then presented with the choice of attending the date arranged online or attending a (superior) blind date. Participants chose how much time that they wanted to commit to the (inferior) date arranged online. Results revealed a significant sunk cost effect (p = 0.003). The implications of the sunk cost effect having an influence over human relationships are discussed.     

Is there a Sunk Cost Effect in Committed Relationships?

The sunk cost effect occurs when a prior investment in one option leads to a continuous investment in that option, despite not being the best decision. The aim of the present paper was to study the role of the sunk cost effect in committed relationships. In Experiment 1, participants (N = 902) were presented with an unhappy relationship scenario in which they needed to make a choice: to stay or end the relationship. Results showed that the likelihood of participants staying in the relationship was higher when money and effort, but not time, had been previously invested in that relationship. In Experiment 2, the time investment was manipulated and the sunk cost was evaluated using a different methodology. Specifically, instead of having a dichotomous decision, participants (N = 275) choose how much time they would be willing to invest in the relationship. Results revealed a sunk time effect, that is, participants were willing to invest more time in a relationship in which more time had already been invested.     

The sunk cost effect across species: A review of persistence in a course of action due to prior investment

The sunk cost effect is the bias or tendency to persist in a course of action due to prior investments of effort, money or time. At the time of the only review on the sunk cost effect across species (Arkes & Ayton, 1999), research with nonhuman animals had been ecological in its nature, and the findings about the effect of past investments on current choice were inconclusive. However, in the last decade a new line of experimental laboratory‐based research has emerged with the promise of revolutionizing the way we approach the study of the sunk cost effect in nonhumans. In the present review we challenge Arkes and Ayton's conclusion that the sunk cost effect is exclusive to humans, and describe evidence for the sunk cost effect in nonhuman animals. By doing so, we also challenge the current explanations for the sunk cost effect in humans, as they are not applicable to nonhumans. We argue that a unified theory is called for, because different independent variables, in particular, investment amount, have the same influence on the sunk cost effect across species. Finally, we suggest possible psychological mechanisms shared across different species, contrast and depreciation, that could explain the sunk cost effect.     

Let It Go: Positive Affect Attenuates Sunk Cost Bias by Enhancing Cognitive Flexibility

Sunk cost bias is a pervasive problem in consumer decision making. It occurs when people continue to invest resources toward unsuccessful outcomes merely because they previously invested in them. This tendency exists because people devote too much attention to prior investments without considering how other factors may impact their decision outcome. While many suggested interventions to attenuate sunk cost bias involve altering cognitive processes, we examine an alternate affective route. Specifically, we propose that inducing positive affect attenuates sunk cost bias by naturally facilitating flexible thought processes. Across four studies, using hypothetical and real decision tasks, we find that positive affect induced in three different ways consistently attenuates sunk cost bias involving money, time, and effort investments. Further, we demonstrate that this occurs because people experiencing positive affect have enhanced cognitive flexibility. They consider more relevant decision factors and perceive sunk cost as having less of an influence on their decision outcomes. Then, in a fifth study, we show that a thought intervention promoting flexibility can attenuate consumers’ suboptimal commitment tendency in a field setting.     

Escalation and De-escalation of Commitment in Response to Sunk Costs: The Role of Budgeting in Mental Accounting

Research has traditionally assumed that people increase investment (or "escalate commitment") in response to previous investments (sunk costs). This paper presents several demonstrations which show that people will incorrectly de-escalate investment in response to sunk costs. I propose that people set mental budgets to control their resource expenditures: they set a budget for a class of expenses and track their investments against their budget. A lab study with real monetary incentives shows support for de-escalation and supports a specific rule for how people set budgets - based on the breakeven of total costs and total benefits. The budgeting process suggests that people are only likely to escalate commitment when they fail to set a budget or when expenses are difficult to track. The later part of the paper organizes the previous literature on escalation around these processes and provides additional experiments to illustrate each point. For example, I argue that previous demonstrations that have shown errors of escalation exclusively involve "incidental" investments that are difficult to track. A study in the current paper shows that people are more willing to invest time than money to salvage a monetary sunk cost and more willing to invest money than time to salvage a sunk cost of time, even when the time and money investments are of equal value. The paper concludes by discussing the rationality of escalation and de-escalation.     

No Time to Waste: Restricting Life‐Span Temporal Horizons Decreases the Sunk‐Cost Fallacy

In three studies, we examined the influence of restricted and expansive temporal horizons on the sunk‐cost fallacy. The sunk‐cost fallacy occurs when prior investments instead of future returns influence decisions about future investments. When making decisions about future investments, rational decision makers base decisions on future consequences, not already‐invested costs that are “sunk” and cannot be recovered. In Study 1, we restricted young adult college students' temporal horizons by instructing them to imagine that they did not have much longer to live; this manipulation decreased the sunk‐cost fallacy. In Study 2, we replicated Study 1 and also found that the consequences of manipulating temporal horizons were most pronounced for prior investments of time and that prior investments of time and money had different implications for the sunk‐cost fallacy, depending on the social or nonsocial decision domain. In Study 3, we manipulated temporal horizons by instructing students to imagine their time as a college student was coming to an end. Results were mostly similar to Study 2 but also suggested that focusing on one's mortality may have unique consequences. Implications of the three studies for understanding age differences in sunk‐cost decisions, interventions to improve sunk‐cost decisions, and the situations in which interventions might be most needed are discussed. Copyright © 2013 John Wiley & Sons, Ltd.     

Escalation behavior in domains related and unrelated to decision makers' academic background

Based on Staw and Ross's (1987) analysis of escalation behavior it was hypothesized that (a) those who are involved with projects related to their academic background will tend to persist in a losing course of action and to judge the situation as reversible more than those who have to make decisions in areas unrelated to their specialty; (b) providing information that the loss is irreversible will decrease the tendency to invest additional resources. A secondary goal of the study was to examine whether there would be any difference in sunk cost decisions when the resource invested is financial as compared to time. Using a 2 × 2 × 2 factorial design, a total of 296 students were given eight different scenarios in which relatedness of decision subject-matter to academic background, reversibility of the situation, and type of resources (time or money) were the independent variables, and commitment to a course of action was the dependent variable. The results confirmed the hypotheses. No significant main effect for type of resources (time vs. money) was found. Theoretical and practical implications of the results are discussed.The authors thank Dr. Michael Hoffman for his valuable contribution in preparing this paper.     

The sunk‐time effect: An exploration

We explored the potential for a sunk‐cost effect in the realm of time. Questionnaire studies (Experiments 1–4) obtained a sunk‐time effect that was robust to manipulations of prospective value, individual versus group consequences, and the effort or enjoyment inherent in the time. Behavioral experiments (Experiments 5–7) also suggested a sunk‐time effect and found support for a personal responsibility by sunk‐cost interaction on choice behavior. We discuss theoretical implications and a potential connection to animal sunk‐cost phenomena. Copyright © 2008 John Wiley & Sons, Ltd.     

Impact of decision goal on escalation

This research investigates the sunk-cost effect or escalation defined as the irrational tendency to choose to continue to invest money, time, or effort following unsuccessful investments. Building on previous research demonstrating a loss-sensitivity principle in sequential decision making, the hypothesis was proposed that a loss-minimization goal would lead to stronger effects of sunk outcomes (prior gains and losses) than would a gain-maximizing goal. The hypothesis was investigated in three experiments with undergraduates responding to investment decision scenarios. Although the tendency to continue investments was always larger for gain-maximizing than for loss-minimizing goal instructions, the sunk-outcome effect was stronger in the former case. However, when the decisions were personal and concerned lower stakes rather than business investments involving large amounts of money, the expected stronger effect of sunk outcomes was found for loss-minimizing goal instructions. Another finding was that the expected value was never ignored, thus suggesting that future research should focus on the joint effects of the expected value and sunk outcomes.     

沉没成本效应的产生根源与影响因素

沉没成本效应是指决策者的决策行为因受沉没成本影响而产生的一种非理性决策现象。针对这一决策偏差的产生根源,研究者从认知、动机和神经三个角度提出了解释。沉没成本效应的影响因素包括沉没成本特性、情境因素、个体差异和文化差异等。基于先前研究存在的问题和不足,沉没成本效应的未来研究应着眼于改进研究方法,探究产生根源,关注行为沉没成本和加强应用研究。     

A query theory account of the effect of memory retrieval on the sunk cost bias

The sunk cost bias occurs when individuals continue to invest in the same option when better alternatives are available. Many researchers believe that this bias is due to overemphasizing the past investment over the (missed) opportunities offered by alternatives. As an alternative or complement to this view, we show that memory retrieval and attention play important roles in the sunk cost bias. In two experiments, individuals generated more reasons for pursuing the invested option than for an alternative; they generated those reasons earlier in a sequence of reasons; and these effects increased as the individuals made progress toward attaining the reward yielded by the invested option. Associated with these effects, individuals perceived an increasingly wide gap in value between the invested and alternative options as they progressed toward the goal, thereby creating the sunk cost bias. Forcing individuals to reverse the order in which they generated reasons for the invested and alternative options reduced the bias. [corrected]     

Erratum to: A query theory account of the effect of memory retrieval on the sunk cost bias

The sunk cost bias occurs when individuals continue to invest in the same option when better alternatives are available. Many researchers believe that this bias is due to overemphasizing the past investment over the (missed) opportunities offered by alternatives. As an alternative or complement to this view, we show that memory retrieval and attention play important roles in the sunk cost bias. In two experiments, individuals generated more reasons for pursuing the invested option than for an alternative; they generated those reasons earlier in a sequence of reasons; and these effects increased as the individuals made progress toward attaining the reward yielded by the invested option. Associated with these effects, individuals perceived an increasingly wide gap in value between the invested and alternative options as they progressed toward the goal, thereby creating the sunk cost bias. Forcing individuals to reverse the order in which they generated reasons for the invested and alternative options reduced the bias.     

Inaction inertia, the sunk cost effect, and handedness: Avoiding the losses of past decisions

Strength of handedness, or the degree to which an individual prefers to use a single hand to perform various tasks, is a neurological marker for brain organization and has been shown to be linked to episodic memory, attribute framing, and anchoring, as well as other domains and tasks. The present work explores the relationship of handedness to both inaction inertia (the inclination to resist an action after previously bypassing a similar action) as well as to the sunk cost effect (the tendency to continue to engage in a behavior after an initial investment of time or money has been made). In Experiment 1, mixed-handers displayed a larger inaction inertia effect than strong-handers. In Experiment 2, they displayed a larger sunk cost effect than strong-handers. Experiments 3 and 4 extended the sunk cost finding into a different domain and explored how mixed- and strong-handers react to additional information designed to increase the comparative advantage of terminating, rather than continuing, a failed project. Overall, we found that mixed-handers were more likely to show inertia effects because of an increased aversion to losses. The results of Experiment 4 suggest that, when provided with additional information that made it clear that continuing a project would be a greater loss than terminating it, mixed-handers no longer showed a larger sunk cost effect than strong-handers, highlighting the importance of carefully considering exactly how sunk cost scenarios are worded and providing additional information on how mixed- and strong-handers differ in belief updating.     

Weighing the past and the future in decision making

Prior irreversible investments of money, time, or effort referred to as sunk costs frequently lead to decisions to continue a chosen course of action despite that this is irrational. With the aim of demonstrating that such escalation of commitment is a special case of a more general phenomenon, two experiments were carried out employing undergraduates as participants. Experiment 1 showed for fictitious personal and business investment scenarios that both prior losses and gains (sunk outcomes) affected choices to continue or discontinue the investment. In Experiment 2 the effect of sunk outcomes was reduced although not eliminated by a monetary bonus that in one condition depended on the future outcomes of the second gamble in two-stage gambles, in another condition on the future returns in personal investment scenarios. In support of a more inclusive theory subsuming escalation of commitment, the decisions were affected by both past and future outcomes and both gains and losses.     

Escalation of commitment with transparent future outcomes

A frequent case of irrational decision making is the tendency to escalate commitment to a chosen course of action after unsuccessful prior investments of money, effort, or time (sunk costs). In previous research it is argued that escalation does not occur when future outcomes and alternative investments are transparent. Inconsistent with this argument, in an experiment in which undergraduates were presented fictitious investment problems with sunk costs, escalation was demonstrated when full information was given about investment alternatives and estimates of future returns. Thus, it is indicated that people may escalate despite knowing that it will not make them economically better off. A more comprehensive understanding of escalation requires disentangling people's noneconomic reasons for escalation.     

The mental accounting of sunk time costs: why time is not like money

The sunk‐cost effect, an irrational attention to non‐recoverable past costs while making current decisions, has been documented widely in the domain of monetary costs. In this paper, I study the effect of past time investments on current decisions. In three experiments using choice situations, I demonstrate that the sunk‐cost effect is not observed for past investments of time, but the effect reappears when the investments are expressed as monetary quantities. I further propose that this ‘pseudo‐rationality’ is due to the fact that individuals lack the ability to account for time in the same way as they account for money. In two additional experiments, I facilitate the accounting of time and show that the irrational sunk‐cost effect reappears. In a final experiment, I test my propositions in a setting where subjects make real investments of time and subsequently make real choices. Copyright © 2001 John Wiley & Sons, Ltd.     

时间定价对亲社会行为的影响

时间定价就是将金钱价格赋予时间之上,用金钱来衡量时间的价值。已有研究表明,时间定价激活时间经济价值最大化的心理定势,使个体更看重时间的经济回报,花更少的时间帮助他人。但是,时间定价对亲社会行为的影响可能并不仅仅局限于时间利他。本研究通过三个实验,除了考察时间定价对时间利他的影响外,还进一步探讨时间定价对金钱利他的影响。结果显示,时间定价不仅影响个体的时间利他行为,也削弱了金钱利他行为。这表明,时间定价所激活的经济效用心理定势不仅仅局限于时间这一种资源的效用。     

Sunk cost: pigeons (Columba livia), too, show bias to complete a task rather than shift to another

The sunk cost effect involves the bias to stay with an alternative because one has already invested resources, even when there is a better alternative available. In a series of experiments, at various points during a 30-peck requirement, pigeons (Columba livia) could choose between completing the response requirement (at a different location in Experiment 1 or the same location in Experiments 3 and 4) and switching to a constant number of pecks. In three experiments, the pigeons showed a bias to complete the pecks already started, even when that required more pecking. We also demonstrated that the bias depended on the initial investment and was not produced merely because the pigeons preferred a variable alternative over a fixed alternative. The deviation from optimal choice suggests that pigeons show a bias similar to the sunk cost effect in humans.