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Tuition Fees and Sunk‐cost Effects

Author

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  • Nadine Ketel
  • Jona Linde
  • Hessel Oosterbeek
  • Bas van der Klaauw

Abstract

This article reports on a field experiment testing for sunk‐cost effects in an education setting. Students signing up for extra‐curricular tutorial sessions randomly received a discount on the tuition fee. The sunk‐cost effect predicts that students who pay more will attend more tutorial sessions, with possibly beneficial effects on their performance. For our full sample, we find no support for this hypothesis, neither on attendance nor on performance. Results are consistent with a sunk‐cost effect for the subsample of students who, based on hypothetical survey questions, are identified as sunk‐cost prone. We do not find differential effects by students’ income or parental contributions.

Suggested Citation

  • Nadine Ketel & Jona Linde & Hessel Oosterbeek & Bas van der Klaauw, 2016. "Tuition Fees and Sunk‐cost Effects," Economic Journal, Royal Economic Society, vol. 126(598), pages 2342-2362.
  • Handle: RePEc:oup:econjl:v:126:y:2016:i:598:p:2342-2362.
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    File URL: http://hdl.handle.net/10.1111/ecoj.12297
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    Cited by:

    1. Beneito, P. & Boscá, J.E. & Ferri, J., 2018. "Tuition fees and student effort at university," Economics of Education Review, Elsevier, vol. 64(C), pages 114-128.
    2. Robalo, Pedro & Sayag, Rei, 2018. "Paying is believing: The effect of costly information on Bayesian updating," Journal of Economic Behavior & Organization, Elsevier, vol. 156(C), pages 114-125.
    3. Hisaki Kono & Yasuyuki Sawada & Abu S. Shonchoy, 2016. "DVD-based Distance-learning Program for University Entrance Exams: Experimental Evidence from Rural Bangladesh," CIRJE F-Series CIRJE-F-1027, CIRJE, Faculty of Economics, University of Tokyo.

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