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The Absence of a Sunk Cost Effect in a Long Shot Gamble and Scams

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  • Sam Y. Yu

Abstract

Why do people fall for scams? This paper presents an experiment about the effect of a sunk cost on unwise decision making. This experiment portrays a scam involved in a long shot gamble. The experiment uses two conditions; one condition hosts the sunk cost effect, and the other without the effect. These two conditions help reveal the fact if a sunk cost effect indeed presents itself in scams. The results of said experiment did not indicate a significant difference between the two conditions, suggesting that a sunk cost effect most likely does not play a big role in scams.

Suggested Citation

  • Sam Y. Yu, 2022. "The Absence of a Sunk Cost Effect in a Long Shot Gamble and Scams," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 14(12), pages 1-68, December.
    • Handle: RePEc:ibn:ijefaa:v:14:y:2022:i:12:p:68
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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