Poster #40 - Sunk-cost effect from 3 to 97 years of age

• In Event: 1-115 - Poster Session 03
  In Poster Session: PS 03 Section - Cognitive Processes

Integrative Statement

The sunk-cost effect (SCE) is the tendency to continue pursuing a venture due to previous unrecoverable investments (i.e. money, time, effort), despite uncertain or unfavorable outcomes (Arkes & Blumer, 1985). Studies of the SCE in children and adolescents have yielded mixed findings. Some researchers suggest that children are less susceptible to the SCE (Arkes & Ayton, 1999). Others have demonstrated that the SCE is present in childhood and adolescence and decreases with age (Klaczynski, 2001). Further, older adults have been shown to be less susceptible to the SCE than younger adults (Bruin de Bruin, Parker, & Fischhoff, 2012). Thus, current developmental research suggests that the SCE may be high or low in childhood, lower in late adolescence, and stable in adulthood, with further declines in older adulthood (Strough, Karns & Schlosnagle, 2011).

However, much of the developmental research on the SCE uses different measures across age groups. To better establish the developmental trajectory of the SCE we used an all-ages measure of the SCE in a lifespan sample of 612 participants ages 3-97.

In our study, participants heard two decision-making scenarios: a no sunk-cost scenario (Figure 1a) and a sunk-cost scenario (Figure 1b).









Figure 1a Figure 1b

Figure 1: Sunk-cost scenarios.

Analysis of SCE magnitude across the lifespan revealed both linear and quadratic age effects. We then grouped age: 3-5 years (n = 78), 6-9 years (n = 101), 10-17 years (n = 108), 18-64 years (n = 226), and 65+ years (n = 99). We found that the SCE emerged (marginally) in late adolescence and remained stable throughout adulthood (see Figure 2).


















Figure 2. SCE across the lifespan. SCE = Baked pizza rating – Free pizza rating. Error bars = SEMs.

We also investigated three types of sunk-cost decisions: “analytic” decisions in line with rationality (i.e., Sally will eat equal amounts of both pizzas), “heuristic” decisions in line with the SCE (i.e., Sally will eat more of the pizza she sunk costs into), and “other” decisions in line with neither (i.e., Sally will eat more of the free pizza). Children (3-17) were equally likely to make each type of decision (i.e., respond randomly) and adults (18-65+) were more likely to respond heuristically or analytically. However, adults age 65+ were more likely to fall victim to the SCE; with more responding heuristically than analytically.

Thus, the SCE emerges between adolescence and early adulthood, at which point it increases into older adulthood. The dual process theory best explains age-related ability to make rational decisions in sunk-cost scenarios (Klaczynski & Cottrell, 2004). Adolescents and young adults begin to utilize explicit cognitive processes to resist sunk costs and implement more rational decision making, whereas children rely on implicit heuristic processing/decision making. We suggest that children/adolescents may not comprehend sunk costs enough to make heuristic or analytic decisions until emerging adulthood. Developed metacognitive processes may be responsible for both falling victim to the SCE and implementing rational decisions to overcome it.

Authors

• Zachariah Hamzagic, Kwantlen Polytechnic University
  Presenting Author

• Eric Y Mah, Kwantlen Polytechnic University
  Non-Presenting Author

• Daniel G Derksen, Simon Fraser University
  Non-Presenting Author

• Daniel Bernstein, Kwantlen Polytechnic University
  Non-Presenting Author