The sunk‐time effect: An exploration

Abstract

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. , 1985), and correlational field studies (Staw and Hoang, 1995). The effect may be linear (Garland, 1990), and the relative size of the sunk cost may matter more than its absolute size (Garland and Newport, 1991). Theories handling the effect include the desire to avoid waste (Arkes & Ayton, 1999), prospect theory (Whyte, 1986), self-justification (Staw, 1976), and attempted normative decision-making (implied by Bowen, 1987;Bragger, Bragger, Hantula, & Kirnan, 1998;Goltz, 1999;McCain, 1986;Navarro and Fantino, 2005;. This paper explores the sunk-cost effect in a relatively untapped domain, the temporal domain. The only study in the human literature to thoroughly test for a "sunk-time" effect produced a notable failure (Soman, 2001). This paper also explores a potential contributing factor to a sunk-time effect, personal responsibility for the sunk time. While personal responsibility has received much attention in the "escalation" paradigm, its role in the sunkcost effect scarcely has been tested and is poorly understood. The following sections elaborate on these issues. The potential impact of sunk timeAny behavior may be defined in terms of time spent, whether it is waiting in a checkout line, maintaining a friend, a hobby, or holding a belief. If the sunk-cost effect occurs with time, then potentially it could affect anything one does. Anecdotally, some behaviors do appear to intensify over time, for no clear reason other than the simple passage of time. In common parlance, "old habits die hard". Popular examples are relationships that persist for too long, and people who cling to a belief or attitude long after the point where opposing evidence is

Beating Irrationality: Does Delegating to IT Alleviate the Sunk Cost Effect?

“…We are the first to observe behavioral investments in a real market setting and to analyze their role on the sunk cost effect. Our findings support the laboratory experiments of Caldieraro (2009, 2010) and Navarro and Fantino (2009) The findings in this paper are robust and have survived a wide range of robustness checks. The data analyzed in our paper were provided directly by a website offering pay-per-bid auctions.…”

“…With regard to purely behavioral investments there is an absence of evidence from the field and only limited disputable experimental evidence (Cunha and Caldieraro 2009, Navarro and Fantino 2009; in fact, other scholars fail to replicate these experimental results (Otto 2010) or argue that there is no sunk cost effect for behavioral investments, such as time (Soman 2001).…”

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

“…We consequently excluded any study that did not include any empirical data (e.g., Arkes and Ayton 1999;Zayer 2007), did not explicitly manipulate monetary sunk costs as an independent variable (e.g., Staw and Hoang 1995;Camerer and Weber 1999;Soman 2003), or included data for which it was not possible to convert them to effect sizes (e.g., Armstrong et al 1993). We also removed all studies that examined the sunkcost effect in reaction to time or behavioral investments (Soman 2001;Navarro and Fantino 2009;Otto 2010), without providing an hourly exchange rate or wage, from the data set. In addition, some studies included non-human samples (e.g., Maestripieri and Alleva 1991;Arkes and Ayton 1999;Navarro and Fantino 2005;Macaskill and Hackenberg 2012), which were not considered in our analysis.…”

Decision‐making heuristics and biases across the life span

“…Scenarios similar to those that college students may encounter (e.g., continuing versus dropping a paid‐for course when a better, free course becomes available; going on a date arranged by a paid‐for online dating service versus a free date arranged by a friend) have been investigated 75,76 . Because the SCF has been extensively studied by economists, scenarios depicting business decisions (e.g., whether to invest a million dollars to develop an airplane after a rival company develops a better version of the same airplane) also have been used 65,77,78 …”