The Interpersonal Sunk-Cost Effect

Psychological Science
Christopher Y Olivola

Abstract

The sunk-cost fallacy-pursuing an inferior alternative merely because we have previously invested significant, but nonrecoverable, resources in it-represents a striking violation of rational decision making. Whereas theoretical accounts and empirical examinations of the sunk-cost effect have generally been based on the assumption that it is a purely intrapersonal phenomenon (i.e., solely driven by one's own past investments), the present research demonstrates that it is also an interpersonal effect (i.e., people will alter their choices in response to other people's past investments). Across eight experiments ( N = 6,076) covering diverse scenarios, I documented sunk-cost effects when the costs are borne by someone other than the decision maker. Moreover, the interpersonal sunk-cost effect is not moderated by social closeness or whether other people observe their sunk costs being "honored." These findings uncover a previously undocumented bias, reveal that the sunk-cost effect is a much broader phenomenon than previously thought, and pose interesting challenges for existing accounts of this fascinating human tendency.

References

Jul 22, 1999·Social Science & Medicine·B H BornsteinG B Chapman
Jul 23, 2003·Journal of Personality and Social Psychology·Michael I NortonMichael A Hogg
Mar 18, 2006·Science·Lorena PompilioSpencer T Behmer
Apr 21, 2006·Psychological Science·Bryan Jones, Howard Rachlin
Mar 14, 2007·Journal of Personality and Social Psychology·Noah J Goldstein, Robert B Cialdini
Mar 21, 2007·The Journal of Applied Psychology·Kin Fai Ellick Wong, Jessica Y Y Kwong
Dec 25, 2007·Personality & Social Psychology Bulletin·Emily ProninKathleen A Kennedy
Aug 30, 2008·Psychological Science·Jonell StroughKelly L Schuller

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Citations

Mar 26, 2019·PloS One·Nathaniel J S Ashby, Kinneret Teodorescu
Sep 29, 2019·European Archives of Psychiatry and Clinical Neuroscience·Junya FujinoHidehiko Takahashi
Jan 1, 2018·The Behavioral and Brain Sciences·Christopher Y Olivola
Nov 11, 2020·Memory & Cognition·Zachariah I HamzagicDaniel M Bernstein

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