The Investigation of Sunk Cost Effect in a Behavioural Economic Perspective

Authors

  • Iván Bélyácz Professor Emeritus, Faculty of Economics, University of Pécs, Department of Finance and Accounting
  • Kármen Kovács Associate Professor, Faculty of Economics, University of Pécs, Institute of Quantitative Management

DOI:

https://doi.org/10.14267/RETP2023.02.03

Keywords:

sunk cost, sunk cost fallacy, decision, decision bias, behavioural economics, D81, D83, D91, G4, G41

Abstract

This paper aims to demonstrate the effect of sunk costs on decisions from a behavioural economic perspective. It demonstrates, based on a literature review, that not only financial, but also behavioural (time, effort) sunk costs influence decisions. It also examines what reasons can lead to and what factors can influence sunk cost effect, and what theories and relationships can explain it. The paper also discusses how sunk costs influence consumer and corporate decisions and what consequences the latter have at the market level.

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Published

2023-07-04

Issue

Vol. 18 No. 2 (2023)

Section

Articles