Title: What would you do: Sunk-cost effect in moral dilemmas

Honours Student: Zachariah I. Hamzagic

Supervisor: Dr. Daniel Bernstein

Abstract: The sunk-cost effect (SCE) is the tendency to continue pursuing a venture due to previous unrecoverable investments, despite uncertain or unfavorable outcomes.  Previous sunk-cost literature has focused on the intrapersonal aspects of the SCE (i.e. one’s own previous investment and the consequences it has on oneself).  The present research examines the SCE in moral dilemmas, where participants experience a conflict between self-interest and the welfare of others, as well as the interpersonal SCE (i.e. taking another’s perspective in sunk-cost scenarios).  Results indicate mixed findings that people are less susceptible to the SCE in moral dilemmas (as opposed to non-moral dilemmas) (Experiment 1), where sunk-cost decision-making violates commonly held moral values associated with others’ rights and well-being.  However, Experiment 2 suggests that people still show the SCE in moral dilemmas.  Results also show evidence for the interpersonal SCE – people show the SCE even when taking the perspective of someone else in sunk-cost dilemmas.  These findings may help to explain decision-making in real-world-situations involving large investments.