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Tuition fees as a commitment device

Author

Listed:
  • Oosterbeek, Hessel
  • van der Klaauw, Bas
  • Ketel, Nadine
  • Linde, Jona

Abstract

This paper 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 receive larger discounts will attend fewer tutorial sessions. For the full sample, we find little support for this hypothesis, but we find a significant effect of sunk costs on attendance for the 45% of students in our sample who are categorized as sunk-cost prone based on hypothetical survey questions. For them higher tuition fees can serve as a commitment device to attend classes.

Suggested Citation

  • Oosterbeek, Hessel & van der Klaauw, Bas & Ketel, Nadine & Linde, Jona, 2014. "Tuition fees as a commitment device," CEPR Discussion Papers 9862, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9862
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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