On the sunk-cost effect in economic decision-making: a meta-analytic review

Abstract

Although the effect of monetary sunk costs on decision-making is widely discussed, research is still fragmented, and results are sometimes controversial. One reason for this incomplete picture is the missing differentiation between the effect of sunk costs on utilization and progress decisions and its respective moderators. This article presents the results of a meta-analytic review of 98 effect sizes of the sunk-cost effect, with special emphasis on the decision-specific influence of moderators. The results show clear evidence that the sunk-cost effect emerges, though its effect size and the influence of the moderators are contingent on the respective decision type. In particular, we find support for the idea that the sunkcost effect is attenuated by time in utilization decisions. The results also reveal that older adults are less likely to fall prey to the sunk-cost effect than younger adults.

Sunk cost effect in the decision-making process: an analysis with accounting and business administration students

“…In this situation, when starting to execute planning, sometimes it is verified that things do not happen as imagined, as the investments in research and development, and in the brand promotions (Roth, Robbert, & Straus, 2014;Hong, Huang, & Zhao, 2018). This is the moment when the individual questions whether to proceed or abandon the planning (Schulz-Hardt, Vogelgesang, Pfeiffer, & Thurow-Kröning, 2009).…”

Efeito sunk cost no processo de tomada de decisão: uma análise com discentes de ciências contábeis e administração

“…Nessa situação, ao iniciar a execução de um planejamento, por vezes, constata-se que as coisas não acontecem conforme imaginado, a exemplo dos investimentos em pesquisa e desenvolvimento e na promoção de marcas (Roth, Robbert, & Straus, 2014;Hong, Huang, & Zhao, 2018). Este é o momento no qual há o questionamento se o indivíduo deve prosseguir ou desistir do plano (Schulz-Hardt, Vogelgesang, Pfeiffer, & Thurow-Kröning, 2009).…”

Motivational Reasons for Biased Decisions: The Sunk-Cost Effect’s Instrumental Rationality

“…The first is described as “utilization decision,” a decision wherein the decision maker has to choose between two equal alternatives. Roth et al (2015) illustrated this type of decision with the example of a person who purchased a ticket to a play at the local theater but later gets invited by a good friend to a special Italian dinner. Even when the person prefers attending the dinner, he/she thinks about the sunk cost already paid for the ticket and decides to go to the play.…”

“…Experiences in economics do not help to sustain the sunk-cost effect. A meta-analysis by Roth et al (2015), which involved solely monetary sunk-cost decisions, revealed that an economic background on the part of the participants does not have a significant influence on utilization decisions.…”

“…However, most of these cases seem rather artificial, as ‘normal’ participants suddenly are required to imagine that they are a CEO with great responsibility. Moreover, most of these cases only address money (Roth et al, 2015), and focus less, if at all, on time or effort. Even when they do, it is only within a hypothetical frame.…”