To the Depths of the Sunk Cost: an Experiment Revisiting the Elusive Fallacy

Last registered on December 30, 2021

Pre-Trial

Trial Information

General Information

Title
To the Depths of the Sunk Cost: an Experiment Revisiting the Elusive Fallacy
RCT ID
AEARCTR-0008595
Initial registration date
November 20, 2021

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
November 21, 2021, 10:27 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
December 30, 2021, 7:11 AM EST

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Region

Primary Investigator

Affiliation
The University of Chicago

Other Primary Investigator(s)

PI Affiliation
The University of Chicago
PI Affiliation
Columbia University

Additional Trial Information

Status
In development
Start date
2021-11-22
End date
2022-06-30
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Despite being discussed often in both practice and academic circles, the sunk cost effect remains empirically elusive. We develop an experimental design that overcomes the deficiencies of the previous research in identifying the effect. Additionally, we propose a model based on reference-point dependence, and test a novel prediction that when a sunk cost intervention constitutes a gain the effect is smaller (or non-existent) than when it is coded as a loss. We randomize the price of entry into a counting game and observe its effect on playing time. The price (low, medium, or high) is realized after the participant’s decision whether to enter or not. The distribution is fully disclosed prior to the decision, with the low price placing the participant in the gain region and the high price – in the loss region (with placements robust to different reference points).
External Link(s)

Registration Citation

Citation
Beknazar-Yuzbashev, George , Sota Ichiba and Mateusz Stalinski. 2021. "To the Depths of the Sunk Cost: an Experiment Revisiting the Elusive Fallacy." AEA RCT Registry. December 30. https://doi.org/10.1257/rct.8595
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2021-11-22
Intervention End Date
2022-06-30

Primary Outcomes

Primary Outcomes (end points)
The time a participant spends playing the counting game.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We randomize the price of entry into a counting game and observe its effect on playing time. The objective of the game is to count the number of zeros in a sequence of numbers presented on the screen. The price of entry ($0.5, $1.5, or $2.5) is realized after the participant’s decision whether to enter or not.
Experimental Design Details
Before introducing the counting game participants have an opportunity to earn $2.5 for completing a reading task. Subsequently, they face a choice between purchasing a ticket for the counting game, or completing another reading task for a fixed reward of $1. A critical feature of our design is that the distribution of entry prices is fully disclosed prior to the decision. Furthermore, participants are informed that both tasks take on average the same time, and that the average earning in the counting game is $3.

Primary hypothesis (existence of the sunk cost effect):
The average play time in the high price group is greater than in the low price group.

Secondary hypothesis (asymmetry in the sunk cost effect):
The difference in average play time between the high price group and the medium price group is greater than the difference in average play time between the medium price group and the low price group. To test this hypothesis we will use a one-sided t-test in the specified direction.
Randomization Method
We use Qualtrics built-in randomization.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
1500

Note: This number refers to all participants who chose to enter the counting game.
Sample size: planned number of observations
1500
Sample size (or number of clusters) by treatment arms
500 individuals per treatment group (high price, medium price, low price).
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
Social and Behavioral Sciences Institutional Review Board The University of Chicago
IRB Approval Date
2021-11-18
IRB Approval Number
IRB21-0450
IRB Name
Morningside IRB, Columbia University
IRB Approval Date
2021-11-17
IRB Approval Number
IRB-AAAT6659

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials