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Sunk Cost and Reputation Effect


  • Sunku Hahn

    (school of economics, Yonsei University)


Many people are not free from past sunk costs in their decision making processes, even though economic theory tells them to forget the sunk costs. In this paper we will show that it can be a rational behavior for the people not to forget the sunk cost when people are concerned with their future reputations.

Suggested Citation

  • Sunku Hahn, 2012. "Sunk Cost and Reputation Effect," Working papers 2012rwp-52, Yonsei University, Yonsei Economics Research Institute.
  • Handle: RePEc:yon:wpaper:2012rwp-52

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    References listed on IDEAS

    1. Wolfgang HÄRDLE & H. LÜTKEPOHL & R. CHEN, 1996. "A Review of Nonparametric Time Series Analysis," SFB 373 Discussion Papers 1996,48, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    2. I. Gijbels & A. Pope & M. P. Wand, 1999. "Understanding exponential smoothing via kernel regression," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 61(1), pages 39-50.
    3. Lejeune, Michel & Sarda, Pascal, 1992. "Smooth estimators of distribution and density functions," Computational Statistics & Data Analysis, Elsevier, vol. 14(4), pages 457-471, November.
    4. Hansen, Bruce E, 1995. "Regression with Nonstationary Volatility," Econometrica, Econometric Society, vol. 63(5), pages 1113-1132, September.
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    More about this item


    sunk cost; reputation;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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