Harm to others reduces the sunk-cost effect.

Abstract

The sunk-cost effect (SCE) is the tendency to continue investing in something that is not working out because of previous investments that cannot be recovered. In three experiments, we examine the SCE when continued investment violates the ethic of care by harming others. In Experiment 1, the SCE was smaller if the sunk-cost decision resulted in harmful consequences towards others (an interaction between sunk cost and the ethic of care). In Experiment 2, participants considered vignettes from their own or another person's perspective. We observed an interpersonal SCE - people showed the SCE when taking the perspective of others. We did not replicate the interaction found in Experiment 1. In Experiment 3, we used statistically more powerful analyses - Bayesian sequential hypothesis testing - to examine the interaction between sunk cost and the ethic of care. We found evidence in favor of the interaction; the SCE was smaller if the sunk-cost decision harmed others. We suggest that violating one's ethic of care de-biases decision-making by overshadowing sunk costs. These findings may help explain decision-making in real-world situations involving large investments.