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

Last registered on March 24, 2022
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Pre-Trial

Trial Information

General Information

Title
To the Depths of the Sunk Cost: an Experiment Revisiting the Elusive Fallacy (Prolific)
RCT ID
AEARCTR-0009017
Initial registration date
March 21, 2022

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
March 24, 2022, 5:00 PM EDT

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

Locations

Country
United States of America
Region

Primary Investigator

Name
Mateusz Stalinski
Affiliation
University of Warwick
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Other Primary Investigator(s)

PI Name
Sota Ichiba
PI Affiliation
The University of Chicago
Contact Investigator
PI Name
George Beknazar-Yuzbashev
PI Affiliation
Columbia University
Contact Investigator

Additional Trial Information

Status
In development
Start date
2022-03-22
End date
2022-04-30
Keywords
Behavior
Additional Keywords
Sunk Cost, Sunk Cost Fallacy, Loss Aversion, Mental Accounting, Escalation of Commitment, Regret
JEL code(s)
C91, D11, D12, D90
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Despite being often discussed both in practice and academic circles, the sunk cost effect remains empirically elusive. We develop an experimental paradigm that overcomes the deficiencies of the previous research in identifying the effect. Additionally, motivated by a model based on reference point dependence, we formulate a novel prediction that if the intervention places individuals on the same side of the reference point (for example, both in the gain region), the sunk cost effect does not manifest itself. In an online study, we randomize the price of a ticket to enter a game where the payoff depends on performance, and observe its effect on playtime. The price (low, medium, or high) is realized after the purchase of the ticket. The distribution is fully disclosed prior to the event, with the low and high prices placing the participant on the opposite sides of the reference point.
External Link(s)

Registration Citation

Citation
Beknazar-Yuzbashev, George , Sota Ichiba and Mateusz Stalinski. 2022. "To the Depths of the Sunk Cost: an Experiment Revisiting the Elusive Fallacy (Prolific) ." AEA RCT Registry. March 24. https://doi.org/10.1257/rct.9017-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2022-03-22
Intervention End Date
2022-04-30

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 a ticket to enter a game and observe its effect on playtime. The objective of the game is to count the number of zeros in a sequence of digits presented on the screen. The price of entry ($0.5, $1.5, or $2.5) is realized after the purchase of the ticket.

Note: In November 2021, CloudResearch unexpectedly changed its policy regarding options for screening of participants, which prevented us from conducting the study on MTurk as initially planned (pre-registration URL: https://doi.org/10.1257/rct.8595-1.1). Subsequently, we moved our study to Prolific, made adjustments to comply with the new platform’s compensation requirements and to reflect the new participant pool (recalibration). The Prolific protocol is the subject of this pre-registration.
Experimental Design Details
Before introducing the counting, game participants have an opportunity to earn $2.75 for completing a memory game. Subsequently, they purchase a ticket to enter the counting game. A critical feature of our design is that the price distribution is fully disclosed prior to the purchase.

Each round, participants get rewarded for correctly counting the number of zeros in a sequence of 30 digits. The per-round payoff gradually decreases over time, and participants are free to end the game at any point in time and cash in their rewards.

Primary hypothesis (existence of the sunk cost effect):
The average playtime 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 playtime between the high price group and the medium price group is not equal to the difference in average playtime between the medium price group and the low price group.
Randomization Method
We use Qualtrics built-in randomization.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
1800 individuals

Sample size: planned number of observations
1800 individuals
Sample size (or number of clusters) by treatment arms
600 individuals per treatment group (high price, medium price, low price).
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Social and Behavioral Sciences Institutional Review Board The University of Chicago
IRB Approval Date
2022-01-19
IRB Approval Number
IRB21-0450
IRB Name
Morningside IRB, Columbia University
IRB Approval Date
2022-03-21
IRB Approval Number
IRB-AAAT6659
Analysis Plan

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