Evidence for an Interpersonal Sunk Cost Effect in the absence of Waste

In recent decades, a range of competing theories have been offered to explain why individuals sometimes persist in, or escalate commitment to, a suboptimal course of action because of prior investments of money, effort or other resources – i.e., the sunk cost effect. In evaluating these theories, it is important to identify scenarios in which they generate divergent predictions. We carried out 4 pre-registered experiments (N = 1,481) implementing two such types of scenarios: (1) waste-free scenarios, in which the resource is not lost but can be repurposed to a new goal; and (2) interpersonal scenarios, in which the decision-maker is not the individual who made the prior investment. Experiment 1 demonstrates that another individual’s non-wasted effort significantly increases escalation of commitment. Experiment 2 shows that the other individual’s prior effort can boost escalation of commitment even more than one’s own. Experiment 3 provides evidence that the effect of others’ prior investments may be driven by social expectations. Experiment 4 replicates the effect of another individual’s prior investment while yielding no evidence that it makes any difference whether the initial decision was made jointly or by the other individual alone. Taken together, our findings challenge theories focused on waste aversion and self-justification, and highlight the complexity of ways in which social context shapes sunk cost reasoning.