How does cognitive dissonance influence the sunk cost effect?

ABSTRACT:

Background

The sunk cost effect is the scenario when individuals are willing to continue to invest capital in a failing project. The purpose of this study was to explain such irrational behavior by exploring how sunk costs affect individuals' willingness to continue investing in an unfavorable project and to understand the role of cognitive dissonance on the sunk cost effect.

Methods

This study used an experimental questionnaire survey on managers of firms listed on the Taiwan Stock Exchange and Over-The-Counter.

Results

The empirical results show that cognitive dissonance does not mediate the relationship between sunk costs and willingness to continue an unfavorable investment project. However, cognitive dissonance has a moderating effect, and only when the level of

SUBMITTER: Chung SH 

PROVIDER: S-EPMC5840294 | biostudies-literature | 2018

REPOSITORIES: biostudies-literature