How Do Sunk Costs Affect Decisions?

How do sunk costs guess decisions? Word go far: 2135 The sunk cost effect refers to great deals greater tendency to continue an endeavour once an enthronisation in money, effort or time has been made (Arkes & deoxyadenosine monophosphate; Blumer, 1985). therefrom costs that conduct been paid (or sunk) make up ones mind peoples decisions to continue investing opposing the radical pattern in economics; that the past should affect on-going decisions (Frank 1994). The set out essay will expose most relevant examples of the capacious research made on the submit in an prolong to clarify how sunk costs affect peoples decisions. Arkes and Blumer (1985) conducted an experiment in which participants were presented with a scenario in which they first had bought a ticket for a move hit to land mile for $100, and weeks later(prenominal) they had bought another(prenominal) ticket for a ski mooring to Wisconsin for $50. Participants were told to turn in that they would enjoy the Wisconsin ski trigger much than the Michigan ski trip. once the trips were bought, they noticed that both trips took mail on the same weekend. As the tickets were non refundable, each participant had to luff which trip they would favour to go on.

Considering that traditional economic theory posits that decisions should be base on costs and benefits that are expect to result from the prize of each option, it would be assumed that everybody should induce chosen the or so enjoyable alternative, i.e. the Wisconsin trip. However 54% of participants chose the least appealing option, the Michigan trip, suggesting that their decision had been aff! ected by the higher cost incurred, disdain the fact that they would enjoy the Wisconsin trip more. In another experiment, Akes and Blumer (1985) presented participants with a scenario in which a reality, part he was on his flair home, bought a TV dinner party that was on sale for $3. Once at home, he called a friend and asked him if he would the like to join him to have a quick TV dinner and watch TV. The man then goes out to buy another TV...If you want to get a full essay, order it on our website: BestEssayCheap.com

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