Accounting knowledge, quantification, and budget effects on the sunk cost fallacy.

Abstract

In this study, we investigate the factors that may reduce the sunk cost fallacy. Based on the results of experiments conducted with undergraduates in NTU & NUS, we concluded that the sunk cost effect can be reduced:

(1)by accounting knowledge;

(2)by quantification of future returns; &

(3)when the project costs exceed the budget given.