Daniel Friedman*, Kai Pommerenke*, Rajan Lukose**, Garret
Milam* and Bernardo A. Huberman**
*University of California, Santa Cruz
**Information Dynamics Laboratory, HP Labs
Abstract
We seek to isolate in the laboratory factors
that encourage and discourage the sunk cost fallacy. Subjects
play a computer game in which they decide whether to keep
digging for treasure on an island or to sink a cost (which will
turn out to be either high or low) to move to another island.
The research hypothesis is that subjects will stay longer on
islands that were more costly to find. Nine treatment variables
are considered, e.g. alternative visual displays, whether the
treasure value of an island is shown on arrival or discovered by
trial and error, and alternative parameters for sunk costs. The
data reveal a surprisingly small and erratic sunk cost effect
that is generally insensitive to the proposed psychological
drivers.
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