The sunk-time effect: effect of time invested and reward magnitude using within-subject design

Abstract

This study examines the sunk cost phenomenon in the temporal domain with human subjects. We used an adjusting procedure to quantitatively assess the effect of time on the value of an alternative. To explore whether a magnitude effect, similar to that documented in delay discounting studies, could be observed in a sunk cost scenario, we used a within-subject design with two different magnitudes. Two questionnaires were applied individually to 47 first-year psychology students. In each questionnaire, a hypothetical situation was presented in which participants were told that they had waited a certain amount of time to buy a guitar. Then, participants had to pay for the guitar and choose whether to keep it or sell it. Each questionnaire included five delay conditions (between one month and sixty months). The two questionnaires differed only in the nominal value of the guitar. In one of the questionnaires, a smaller magnitude was used (520 USD); in the other one, the value of the guitar was larger (3900 USD). The data suggest a sunk time effect and a linear increase in the subjective value of the alternatives proportional to the time invested. We found evidence of generality of the magnitude effect to the sunk cost scenario. Time investments caused a greater change in the value of outcomes of smaller magnitudes. We suggest that future research lines could evaluate the generality of these findings using different types of population, questionnaires, frames, delays, and commodities.