Sunk‐Cost Effects on Purely Behavioral Investments

Abstract

Although the sunk-cost effect is a well-documented psychological phenomenon in monetary investments, existing literature investigating behavioral investments (e.g., time, effort) has not replicated this effect except when such investments relate to monetary values. The current explanation for this discrepancy proposes that purely behavioral sunk-cost effects are unlikely to be observed because they are difficult to book, track, and balance in a mental account. Conversely, we argue that, through an effort-justification mechanism, people account for the amount of behavioral resources invested when selecting an alternative, in which case they may fall prey to purely behavioral sunk-cost effects. The results of two experiments support this prediction. Because many decisions involve behavioral investments, behavioral sunk-cost effects should be pervasive psychological phenomena.

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