Sunk cost in investment decisions
Bibliographic Data
| ID | 19039683 |
|---|---|
| Authors | Marcello Negrini (0000-0001-7294-8755), Arno Riedl (0000-0002-4612-6739, corresponding author), Matthias Wibral (0000-0002-7643-2841) |
| Year | 2022 |
| Volume | 200 |
| Pages | 1105-1135 |
| Publication date | 2022-07-27 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Journal of Economic Behavior & Organization (JOURNAL) |
| Journal identifiers | ISSN: 0167-2681 • E-ISSN: 1879-1751 |
| Publisher | Elsevier BV (PUBLISHER) |
| DOI | 10.1016/j.jebo.2022.06.028 |
| OpenAlex | W4288050155 |
| Language | EN |
| Citations received | 2 |
| References cited | 50 |
We experimentally investigate the effect of sunk cost in a two-stage investment continuation task. After an initial investment, participants have to decide whether or not to continue the project with an additional investment. We do not find a standard sunk cost bias, but observe a robust reverse sunk cost effect: the larger the initial investment, the lower the likelihood to continue investing. This holds despite the fact that we replicate the standard sunk cost bias in hypothetical scenarios. We argue that both, risk aversion without asset integration and loss aversion can account for the reverse sunk cost effect
Behavioral economics · Economics · Expected utility hypothesis · Financial economics · Investment Decisions · Microeconomics · Sunk costs · Computer Science · Decision-Making and Behavioral Economics · Economic and Environmental Valuation · Experimental Behavioral Economics Studies
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| Citations per year | 2 |
|---|---|
| Citation span | 2025 - 2025 (1) |
| Highly cited | No |