Do Sunk Costs Matter

Published: Jul 16, 2007
Abstract
That sunk costs are not relevant to rational decision-making is often presented as one of the basic principles of economics. When people are influenced by sunk costs in their decision-making, they are said to be committing the sunk cost fallacy. Contrary to conventional wisdom, we argue that, in a broad range of situations, it is rational for people to condition behavior on sunk costs, because of informational content, reputational concerns, or...
Paper Details
Title
Do Sunk Costs Matter
Published Date
Jul 16, 2007
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