This study examines the relevancy of sunk costs in business decision-making. Using cases, subjects were asked to evaluate the extent to which they used individual pieces of information provided with each case. The study attempts to show that even though we teach students to treat sunk costs as non-relevant in any decision situation, sunk costs are in fact used to some extent in the overall decision process. This apparently non-rational behavior is partially explained using the theory of non-rational escalation of commitment bias.
展开▼
