The Sunk Cost Effect in Humans: Procedural Comparisons

Abstract

The present study was designed to extend research by Pattison et al. (2012) and compare performance on behavior-based and hypothetical scenario-based sunk cost procedures. Participants (n = 25) completed behavior-based and hypothetical scenario-based tasks to investigate the effects of manipulating percent of task completed on sunk cost behavior. For the behavior-based task, participants played a video game and chose between continuing to engage an initial monster or switching to attack a new monster that arrived. For the hypothetical scenario-based tasks, participants were given a scenario in which continuing on a present course of action entailed losses or was otherwise non-optimal. They were asked at various points of completion how likely they were to invest the remaining funds in the project. Overall, participants responded optimally on the behavior-based task and engaged in sunk cost behavior for the hypothetical scenario-based tasks. One explanation for the difference between these tasks is that the behavior-based task may have more discriminable consequences; the consequences for the hypothetical tasks were unknown. Results from the present study align with previous studies suggesting that stimulus discriminability is a major determinant of non-optimal persistence on a task. It is possible that many supposed instances of the sunk cost effect are better conceptualized as behavior produced by contingencies in contexts with uncertain or probabilistic outcomes. In sunk cost procedures with human participants, verbal behavior appears to play an important role.

Appendix

Hypothetical Scenarios

Radar Blank Plane Scenario

You are president of Aero-Flite Corporation, an airplane manufacturer. You have spent $[1/3/5/7/9] million of the $10 million budgeted for a research project to develop a radar-scrambling device that would render a plane undetectable by conventional radar (in effect, a radar blank plane). The project is [10/30/50/70/90]% complete. Another firm has begun marketing a similar device that takes up less space and is much easier to operate than Aero-Flite’s.

How likely is it (from 0 to 100) that if faced with this situation, you would decide to use the last $9 million dollars to complete this project? Click and drag the slider below to choose your answer.

Building Remodel Scenario

You are the owner and manager of Security Tower, and older downtown office building that overlooks several square blocks in an area that has been slated for urban renewal over the next three years. The City Council has indicated that it would like to create a “greenway” with grass, trees, and a small lake networked with bicycle and jobbing paths. You have begun remodeling your building, anticipating renewed interest in downtown offices, with convenient parking, good access to the cross-town freeway, and a nice view. You have spent $[10k, 30k, 50k,70k, 90k] of the approximately $100,000 you had budgeted for remodeling and the project is [10, 30, 50, 70, 90]% complete. You have just learned that the “greenway” plan has been voted down in favor of a sports stadium that will give all 15 floors of your building a view of cement walls and/or parking lots. Additionally, the increased traffic in the area will clog the freeway access for years, even with the plans to widen adjacent streets.

How likely is it (from 0 to 100) that if faced with this situation, you would decide to use the last $90,000 dollars to complete this project? Click and drag the slider below to choose your answer.