The impact of locus of control on the incidence of the sunk-cost effect
a quasi-experimental approach
DOI:
https://doi.org/10.16930/2237-766220253588Keywords:
Sunk-Cost, Sense of control, Students, Prospect TheoryAbstract
The aim of this article was to analyze the impact of the sense of control on the influence of the sunk-cost effect on the willingness to invest in unprofitable projects. In order to achieve the proposed objective, a quantitative survey was carried out using a quasi-experiment with 192 students from different business courses at a university in the Brazilian Midwest. The results indicated that the presence of the sunk-cost effect, expressed both in monetary terms and in terms of project completeness, increased students' willingness to continue investing in unprofitable projects. Contrary to expectations, the levels of sense of control were not associated with the incidence of the sunk-cost effect and the willingness to invest in unprofitable projects, indicating that the perception of control over present and future events is not capable of mitigate/intensify the incidence of heuristic biases in investment decisions. In practical terms, the study reinforces the importance of implementing formal investment evaluation mechanisms in organizations. In the educational sphere, the findings suggest the need to review teaching strategies on economic rationality and the importance of interdisciplinary integration in business education in order to promote greater awareness among students on how cognitive biases, especially sunk costs, can affect financial decisions.
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