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  Sunk-cost fallacy and cognitive ability in individual decision-making

Haita-Falah, C. (2017). Sunk-cost fallacy and cognitive ability in individual decision-making. Journal of Economic Psychology, 58, 44-59. doi:10.1016/j.joep.2016.12.001.

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 Creators:
Haita-Falah, Corina1, 2, Author              
Affiliations:
1The CliSAP Cluster of Excellence, External Organizations, ou_1832285              
2C 1 - Societal Use of Climate Information, Research Area C: Climate Change and Social Dynamics, The CliSAP Cluster of Excellence, External Organizations, Bundesstraße 53, 20146 Hamburg, DE, ou_1863487              

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 Abstract: This paper reports on a laboratory experiment aiming at documenting the sunk-cost fallacy in individual decision-making and at identifying the role of the cognitive ability in its manifestation. For this purpose, the design rules out loss aversion and cognitive dissonance, identified by the literature as being the main psychological drivers of the bias. The sunk-cost fallacy is identified by comparing a low and a high sunk-cost treatment, respectively, against a control group that does not incur a sunk cost. There is evidence of a weak manifestation of the sunk-cost fallacy, which is statistically significant only for the high sunk-cost treatment. However, strong evidence of the fallacy was found among the high-cognitive-ability subjects. Finally, although cognitive ability is predictive of status-quo bias, it was not found to reduce the sunk-cost bias.

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Language(s): eng - English
 Dates: 2017-02
 Publication Status: Published in print
 Pages: -
 Publishing info: -
 Table of Contents: -
 Rev. Type: Peer
 Identifiers: DOI: 10.1016/j.joep.2016.12.001
 Degree: -

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Title: Journal of Economic Psychology
Source Genre: Journal
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Publ. Info: North-Holland
Pages: - Volume / Issue: 58 Sequence Number: - Start / End Page: 44 - 59 Identifier: ISSN: 0167-4870
CoNE: https://pure.mpg.de/cone/journals/resource/954921376713