Culture-related factors affect sunk cost bias.

Abstract

A B ST R A C T Reasoning and decision-making are fraught with systematic errors in thinking. One key example is sunk cost, a past investment that cannot be recovered, that influences ongoing decisions. A sunk cost bias occurs when previous choices affect present decisions. Sunk cost decision-making has been primarily studied in Western, individualistic cultures although some attention has been focused on comparing its prevalence in collectivist cultures such as Japan and China. We evaluated the influence of individualist and collectivist cultures, perceived control and the role of self. In Study 1 Americans and Indians were primed with cultural values and then presented with sunk cost decision scenarios. Results indicated Americans made more sunk cost decision errors than Indians and personal decisions were associated with more bias than decisions made on behalf of others. Cultural differences on sunk cost bias were consistent with self-justification theory. In Study 2 a new set of sunk cost scenarios varied environmental use and sustainability themes. Results indicated particular situations influenced error, although country of origin and perceived behavioral control were also effective at predicting sunk cost bias. keywords: decision-making, cognitive bias, sunk cost, self-view, India, United States, environment