For example, individuals sometimes order too much food and then over-eat just to “get their money’s worth”. Similarly, a person may have a $20 ticket to a concert and then drive for hours through a blizzard, just because she feels that she has to attend due to having made the initial investment. If the costs outweigh the benefits, the extra costs incurred (inconvenience, time or even money) are held in a different mental account than the one associated with the ticket transaction (Thaler, 1999).
Research suggests that rats, mice and humans are all sensitive to sunk costs after they have made the decision to pursue a reward (Sweis et al., 2018) and that a capacity for cognitive reflection can reduce sunk cost behavior (Ronayne et al., 2021).
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References
Arkes, H. R., & Blumer, C. (1985), The psychology of sunk costs. Organizational Behavior and Human Decision Processes, 35, 124-140.
Ronayne, D., Sgroi, D., & Tuckwell, A. (2021). Evaluating the sunk cost effect. Journal of Economic Behavior & Organization, 186, 318-327
Sweis, B. M., Abram, S. V., Schmidt, B. J., Seeland, K. D., MacDonald, A. W., Thomas, M. J., & Redish, A. D. (2018). Sensitivity to “sunk costs” in mice, rats, and humans. Science, 361(6398), 178-181.
Thaler, R. H. (1999). Mental accounting matters. Journal of Behavioral Decision Making, 12, 183-206.