Skip to main page content
U.S. flag

An official website of the United States government

Dot gov

The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Access keys NCBI Homepage MyNCBI Homepage Main Content Main Navigation
. 2018 Mar 1:11:37-45.
doi: 10.2147/PRBM.S150494. eCollection 2018.

How does cognitive dissonance influence the sunk cost effect?

Shao-Hsi Chung  1 , Kuo-Chih Cheng  2
Affiliations

How does cognitive dissonance influence the sunk cost effect?

Shao-Hsi Chung et al. Psychol Res Behav Manag. .

Erratum in

Abstract

Background: The sunk cost effect is the scenario when individuals are willing to continue to invest capital in a failing project. The purpose of this study was to explain such irrational behavior by exploring how sunk costs affect individuals' willingness to continue investing in an unfavorable project and to understand the role of cognitive dissonance on the sunk cost effect.

Methods: This study used an experimental questionnaire survey on managers of firms listed on the Taiwan Stock Exchange and Over-The-Counter.

Results: The empirical results show that cognitive dissonance does not mediate the relationship between sunk costs and willingness to continue an unfavorable investment project. However, cognitive dissonance has a moderating effect, and only when the level of cognitive dissonance is high does the sunk cost have significantly positive impacts on willingness to continue on with an unfavorable investment.

Conclusion: This study offers psychological mechanisms to explain the sunk cost effect based on the theory of cognitive dissonance, and it also provides some recommendations for corporate management.

Keywords: behavior; cognitive dissonance; sunk cost effect; sunk costs; unfavorable investment.

PubMed Disclaimer

Conflict of interest statement

Disclosure The authors report no conflicts of interest in this work.

Figures

Figure 1
Figure 1
The sunk cost effect in high/low cognitive dissonance.
See this image and copyright information in PMC

Similar articles

See all similar articles

References

    1. Hongren C, Foster G, Datar SM. Cost Accounting: A Managerial Emphasis. Upper Saddle River, NJ: Prentice Hall; 2009.
    1. Arkes HR, Blumer C. The psychology of sunk cost. Organ Behav Hum Dec. 1985;35:124–140.
    1. Brockner J. The escalation of commitment to a failing course of action: toward theoretical progress. Acad Manage Rev. 1992;17:39–61.
    1. Sharp DJ, Salter SB. Project escalation and sunk costs: a test of the international generalizability of agency and prospect theories. J Int Bus Stud. 1997;28(1):101–121.
    1. Keil M, Tan BCY, Wei K, Saarinen T, Tuunainen V, Wassenaar A. A cross-cultural study on escalation of commitment behavior in software projects. MIS Quart. 2000;24(2):299–324.

LinkOut - more resources