Sunk Cost Fallacy in Driving the World's Costliest Cars

• 成果类型: Article
• 署名作者: Ho, Teck-Hua; Png, I. P. L.; Reza, Sadat
• 署名单位: National University of Singapore; Nanyang Technological University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2016.2651
• 发表日期: 2018
• 页码: 1761-1778
• 关键词: sunk costs; Mental accounting; behavioral economics; durable goods; Consumer choice

摘要

We develop a behavioral model of durable good usage with mental accounting for sunk costs. It predicts higher-than-rational usage that attenuates at a rate that increases with sunk costs. Singapore government policy varied the sunk cost of buying a new car. Using Singapore data, we estimate the elasticity of driving with respect to sunk costs to be 0.048, which implies that government policy between 2009 and 2013 was associated with 86 kilometers per month, or 5.6%, more driving. The results are robust to specifying sunk costs as relative to buyer income and estimation with Hong Kong data. We believe this to be the first field evidence of the sunk cost fallacy in usage of a major durable good.