Persistent Sunk Cost Fallacy in a Real Effort Experiment
Studies in Microeconomics
Subjects chose whether to leave with an endowment or stay to perform some simple tasks in a real effort experiment. In addition to performance pay, staying subjects received their endowment in the control condition, but had to sacrifice it in the treatment condition. We found average performance of staying subjects, after controlling for selection effects, was higher in the treatment condition. Further, the sunk cost effect persisted well after the decision as to whether to stay or leave had been made. JEL Classification: D24, D83, J24.
Banerjee, Priyodorshi; Chandrasekhar, S.; and Srikant, P., "Persistent Sunk Cost Fallacy in a Real Effort Experiment" (2019). Journal Articles. 1044.