Posted by: Gabriele Paolacci | December 7, 2009

Sunk-cost fallacy

We submitted to 94 workers (66.3% women, mean age = 35.1) a problem created by Stanovich and West (SW; 2008) in order to test for the existence of the sunk cost fallacy. Participants were paid $0.05 for a HIT that comprised other unrelated brief tasks. Participants were randomly assigned to the no-sunk-cost condition and the sunk-cost condition. The no-sunk-cost group read the following scenario:

Imagine that Video Connection rents videos for $1.50. Low Priced Videos, a competitor, rents videos for just $2.00 each. Although the Video Connection store is ten minutes away by car, the Low Priced Videos is only about 1/2 block from your apartment. Assuming that you only rent from these two stores, how many of your next 20 videos rentals would be from the closer but more expensive Low Priced Videos?

The sunk-cost group read a similar scenario in which the choice was between convenience and a discount when the cost of the privilege of the discount had already been sunk:

Imagine that you just paid $50 for a Video Connection discount card that allows you to rent videos for 50% off the regular price of $3.00. Soon after you purchased the Video Connection discount card, Low Priced Videos, a competitor, opened a new store that rents videos for just $2.00 each. Although the Video Connection store is ten minutes away by car, the new Low Priced Videos is only about 1/2 block from your apartment. Assuming that you only rent from these two stores, how many of your next 20 videos rentals would be from the closer but more expensive Low Priced Videos?

All participants responded on a 10-point scale: 0–1 (1), 2–3 (2), 4–5 (3), 6–7 (4), 8–9 (5), 10–11 (6), 11–12 (7), 13–14 (8), 15–16 (9), and 17–20 (10). Responses to this item establish how likely participants are to choose convenience over a discount when they have not already paid for the privilege of the discount (no-sunk-cost condition), or when they have already paid for the privilege of the discount (sunk-cost condition).

The results in SW were successfully replicated. The mean score in the no-sunk-cost condition (6.60 vs. 6.71 in SW) was significantly higher than the mean score of in the sunk-cost condition (4.21 vs. 4.61 in SW; t = 3.70, p < .001). Participants who were told they already paid for the privilege of the discount were significantly more likely to choose the discount store over the competitor.

References

Stanovich, K. E., West. R. F. (2008). On the relative independence of thinking biases and cognitive ability. Journal of Personality and Social Psychology, 94, 672-695.

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Responses

  1. […] Das ganze Experiment wurde nun auch mit Amazons Mechanical Turk repliziert. […]


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