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The Sunk Cost and Concorde Effects: Are Humans Less Rational Than Lower Animals?

The Sunk Cost and Concorde Effects: Are Humans Less Rational Than Lower Animals? The sunk cost effect is a maladaptive economic behavior that is manifested in a greater tendency to continue an endeavor once an investment in money, effort, or time has been made. The Concorde fallacy is another name for the sunk cost effect, except that the former term has been applied strictly to lower animals, whereas the latter has been applied solely to humans. The authors contend that there are no unambiguous instances of the Concorde fallacy in lower animals and also present evidence that young children, when placed in an economic situation akin to a sunk cost one, exhibit more normatively correct behavior than do adults. These findings pose an enigma: Why do adult humans commit an error contrary to the normative cost-benefit rules of choice, whereas children and phylogenetically humble organisms do not? The authors attempt to show that this paradoxical state of affairs is due to humans' overgeneralization of the “Don't waste” rule. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Psychological Bulletin American Psychological Association

The Sunk Cost and Concorde Effects: Are Humans Less Rational Than Lower Animals?

Psychological Bulletin , Volume 125 (5): 10 – Sep 1, 1999

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Publisher
American Psychological Association
Copyright
Copyright © 1999 American Psychological Association
ISSN
0033-2909
eISSN
1939-1455
DOI
10.1037/0033-2909.125.5.591
Publisher site
See Article on Publisher Site

Abstract

The sunk cost effect is a maladaptive economic behavior that is manifested in a greater tendency to continue an endeavor once an investment in money, effort, or time has been made. The Concorde fallacy is another name for the sunk cost effect, except that the former term has been applied strictly to lower animals, whereas the latter has been applied solely to humans. The authors contend that there are no unambiguous instances of the Concorde fallacy in lower animals and also present evidence that young children, when placed in an economic situation akin to a sunk cost one, exhibit more normatively correct behavior than do adults. These findings pose an enigma: Why do adult humans commit an error contrary to the normative cost-benefit rules of choice, whereas children and phylogenetically humble organisms do not? The authors attempt to show that this paradoxical state of affairs is due to humans' overgeneralization of the “Don't waste” rule.

Journal

Psychological BulletinAmerican Psychological Association

Published: Sep 1, 1999

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