Help Privacy Policy Disclaimer
  Advanced SearchBrowse




Journal Article

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

There are no MPG-Authors in the publication available
External Resource
No external resources are shared
Fulltext (public)
There are no public fulltexts stored in PuRe
Supplementary Material (public)
There is no public supplementary material available

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.

Cite as: http://hdl.handle.net/11858/00-001M-0000-002C-5EB9-6
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.