Varying the costs of sunk costs: optimal and non-optimal choices in a sunk-cost task with humans.
People fall for the sunk-cost fallacy only when the extra cost of staying is tiny; enlarge the difference or add clear signals and they switch to the better deal.
01Research in Context
What this study did
Avila et al. (2013) asked adults to play a computer game. Players earned points by pressing keys. They could stay on a long, costly job or quit and start a new, shorter job.
The team changed how many extra presses the long job needed. Sometimes the gap was tiny. Sometimes it was huge. They watched who stayed and who quit.
What they found
When the extra work was only a few presses, most people stayed and lost points. This is the sunk-cost fallacy.
When the extra work was many presses, people quit and earned more. They followed the best deal.
How this fits with other research
Peters et al. (2013) ran the same game the same year. They added bright signals that told players the next job would be short. Signals cut the fallacy even when the cost gap was small. The two labs agree: people stray from optimal choice only when both the cost gap and the signals are weak.
Older studies by Tantam et al. (1993) and Bauman et al. (1996) showed humans switch schedules when delays grow. Raul’s team builds on that: they prove the switch point depends on the size of the delay, not just its presence.
Magalhães et al. (2016) later reviewed birds, rats, and humans. All species show the same bias. The new data fit the cross-species pattern: sunk-cost errors are a general rule-governed glitch, not a human quirk.
Why it matters
Your client insists on finishing a long task even when a better option appears? Check the cost difference. If the extra work is small, the client may stay out of habit. Make the benefit of switching bigger or signal it clearly. Raise the cost of staying or show the payoff of leaving. Small layout changes can flip choice from rule-based to contingency-shaped.
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Put two jobs on the table: make the escape job obviously shorter or sweeter and say it out loud.
02At a glance
03Original abstract
Twelve adult human subjects were exposed to a sunk-cost procedure with two options: a mixed-ratio schedule of points later exchangeable for money, and an escape schedule that cancelled the current trial and initiated a new one. The mixed ratio included four values, arranged probabilistically in such a way that the expected ratios favored either persistence or escape. These probabilities were varied systematically on a within-subject basis across conditions. Absolute ratio size was thus varied across four groups of three subjects each, yielding unique combinations of expected ratios from escaping and persisting. When the differences between escaping and persisting differed the least, subjects tended to persist, committing the sunk-cost error. When the differences between persisting and escaping differed by a larger margin, choice patterns tended toward optimal-escaping or persisting as a function of the contingencies. These findings demonstrate that sunk-cost decision-making errors in humans are sensitive to their relative costs and benefits, and illustrate a promising set of methods for bringing such behavior under experimental control in the laboratory.
Journal of the experimental analysis of behavior, 2013 · doi:10.1002/jeab.42