Loss Aversion as a Potential Factor in the Sunk-Cost Fallacy

The sunk-cost fallacy (SCF) occurs when an individual makes an investment with a low probability of a payoff because an earlier investment was made. The investments may be time, effort, or money. Previous researchers showed that larger prior investments were more likely to lead to the SCF than lowe...

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Autores principales:	Veronika Tait, Harold L. Miller
Formato:	article
Lenguaje:	EN ES
Publicado:	Universidad de San Buenaventura 2019
Materias:	sunk-cost fallacy loss aversion money time effort Psychology BF1-990
Acceso en línea:	https://doaj.org/article/8da9580e6c5043ba806559f8a81780df
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spelling	oai:doaj.org-article:8da9580e6c5043ba806559f8a81780df2021-11-25T02:21:37ZLoss Aversion as a Potential Factor in the Sunk-Cost Fallacy10.21500/20112084.39512011-20842011-7922https://doaj.org/article/8da9580e6c5043ba806559f8a81780df2019-09-01T00:00:00Zhttps://revistas.usb.edu.co/index.php/IJPR/article/view/3951https://doaj.org/toc/2011-2084https://doaj.org/toc/2011-7922 The sunk-cost fallacy (SCF) occurs when an individual makes an investment with a low probability of a payoff because an earlier investment was made. The investments may be time, effort, or money. Previous researchers showed that larger prior investments were more likely to lead to the SCF than lower investments were, though little research has been focused on comparing investment types. There are several theories of the SCF, but few have implicated loss aversion, the higher sensitivity to losses than to gains, as a potential factor. We studied the differential effects of investment amount and type on the occurrence of the SCF and explored loss aversion as a potential explanation of these differences. There were 168 participants, who completed a sunk-cost task as well as an endowment-effect task, which was a measure of loss aversion. A 3×3 mixed-design ANCOVA was used in which the SCF score was the dependent variable and loss-aversion scores were used as a covariate. The SCF occurred most often with money, less with time, and least with effort. Loss aversion displayed a weak negative relation to the SCF. Veronika TaitHarold L. MillerUniversidad de San Buenaventuraarticlesunk-cost fallacyloss aversionmoneytimeeffortPsychologyBF1-990ENESInternational Journal of Psychological Research, Vol 12, Iss 2 (2019)
institution	DOAJ
collection	DOAJ
language	EN ES
topic	sunk-cost fallacy loss aversion money time effort Psychology BF1-990
spellingShingle	sunk-cost fallacy loss aversion money time effort Psychology BF1-990 Veronika Tait Harold L. Miller Loss Aversion as a Potential Factor in the Sunk-Cost Fallacy
description	The sunk-cost fallacy (SCF) occurs when an individual makes an investment with a low probability of a payoff because an earlier investment was made. The investments may be time, effort, or money. Previous researchers showed that larger prior investments were more likely to lead to the SCF than lower investments were, though little research has been focused on comparing investment types. There are several theories of the SCF, but few have implicated loss aversion, the higher sensitivity to losses than to gains, as a potential factor. We studied the differential effects of investment amount and type on the occurrence of the SCF and explored loss aversion as a potential explanation of these differences. There were 168 participants, who completed a sunk-cost task as well as an endowment-effect task, which was a measure of loss aversion. A 3×3 mixed-design ANCOVA was used in which the SCF score was the dependent variable and loss-aversion scores were used as a covariate. The SCF occurred most often with money, less with time, and least with effort. Loss aversion displayed a weak negative relation to the SCF.
format	article
author	Veronika Tait Harold L. Miller
author_facet	Veronika Tait Harold L. Miller
author_sort	Veronika Tait
title	Loss Aversion as a Potential Factor in the Sunk-Cost Fallacy
title_short	Loss Aversion as a Potential Factor in the Sunk-Cost Fallacy
title_full	Loss Aversion as a Potential Factor in the Sunk-Cost Fallacy
title_fullStr	Loss Aversion as a Potential Factor in the Sunk-Cost Fallacy
title_full_unstemmed	Loss Aversion as a Potential Factor in the Sunk-Cost Fallacy
title_sort	loss aversion as a potential factor in the sunk-cost fallacy
publisher	Universidad de San Buenaventura
publishDate	2019
url	https://doaj.org/article/8da9580e6c5043ba806559f8a81780df
work_keys_str_mv	AT veronikatait lossaversionasapotentialfactorinthesunkcostfallacy AT haroldlmiller lossaversionasapotentialfactorinthesunkcostfallacy
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Loss Aversion as a Potential Factor in the Sunk-Cost Fallacy

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