Cognitive dissonance impacts on the sunk cost effect
What is it about?
The sunk cost effect is the scenario when individuals are willing to continue to invest capital in a failing project. 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.
Why is it important?
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.
The following have contributed to this page: Shao-Hsi Chung