# The Feeling of Throwing Good Money After Bad: The Role of Affective Reaction in the Sunk-Cost Fallacy Dijkstra, K.A. and Hong, Y.Y. (2019) ‘The feeling of throwing good money after bad: The role of affective reaction in the sunk-cost fallacy.’, _PLoS One_, 14(1), p. e0209900. Available at: [https://doi.org/10.1371/journal.pone.0209900](https://doi.org/10.1371/journal.pone.0209900). >[!Abstract] > Continuing investing in a failing plan (i.e., the sunk-cost fallacy) is a common error that people are inclined to make when making decisions. It is impossible to get resources back that already have been invested. Hence, economic theory implies that decision makers' decisions should only be guided by future gains and losses. According to the literature, the sunk-cost fallacy is driven by negative affect. Previous studies focused on negative incidental affect. We investigated, in contrast, whether the sunk-cost fallacy is caused by integral affect elicited by the specific decision context. Study 1 demonstrated a positive relationship between affective reaction and the sunk-cost fallacy. Study 2 replicated the finding in Study 1 in a within-subjects design, and demonstrated a full mediation of type of scenario (invest vs. non-invest) on the sunk-cost effect, mediated by integral affective reaction. A mediation using a within-subjects design additionally demonstrated that the effect is mediated by integral emotional responses experienced in relation to each scenario, and not by incidental emotional states that are unrelated to the scenarios. Study 3 replicated findings in the previous studies, and demonstrated that the relation between the sunk-cost fallacy and affect is moderated by justification. Participants who justified their decision were more resistant to the sunk-cost fallacy, and showed less negative affect elicited by the scenarios, than participants who did not justify their decision. Study 4 provided supporting evidence for our hypothesis by hindering conscious deliberation, and promoting reliance on affect, via cognitive load. The results showed that the relation between affect and the sunk-cost fallacy was stronger for participants under high cognitive load, than under low-load. The paper discussed how this research leads to new ways to protect against the sunk-cost fallacy in the discussion. ## Notes - Any decision going forward should not be based on what has happened in the past - The more anticipated regret we have the more we hang on - knowing why can help make decisions to quit - Learning How to Let Go %% ## Highlights > You ordered a full course dinner at a restaurant that includes several appetizers, entrée, main course and dessert. All the courses were very good and now you are eating your dessert; but after having a few bites of your dessert, you feel satiated and would rather not eat any more of it. What would you most likely do? Stop eating, or continue trying to finish the dessert? Many people will continue eating the dessert in order to justify earlier investments that are already made. That is, having ordered the full course dinner and need to pay for it, people feel they should finish it, even though continue eating is not enjoyable anymore; it would be a waste to “pay and not eat” ([View Highlight](https://read.readwise.io/read/01gma8v3jwknamn94bmv00r5nh)) > The same can occur in other domains; such as watching a boring movie on pay TV you already paid for, or continue working on a project related to one of your hobbies you are bored with. Not watching, or quit working, would both be a waste of invested resources—money paid for pay TV, and hours invested in the project. However, it is impossible to get the resources back that you have invested already ([View Highlight](https://read.readwise.io/read/01gma8w27zsqgp50ybdn9phqy0)) ### [[any decision going forward should not be based on what has happened in the past]] > Economic theory implies that decision makers’ decisions should only be guided by future gains and losses, as prior costs do not affect the objective outcomes of current decisions. Hence, the normative correct decision in sunk-cost situations is to ignore past investments. Taking into account past losses or investments is a decision strategy that has been dubbed the 'Sunk-Cost fallacy' or 'Sunk-Cost effect'. It is considered a mistake or faulty strategy. In more neutral terms, as Arkes and Blumer ([[1](https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0209900#pone.0209900.ref001)] p. 124) put it, the sunk-cost effect refers to the tendency “to continue an endeavor once an investment in money, effort, or time has been made”. ([View Highlight](https://read.readwise.io/read/01gma8xntje1d36jb3sk7wsvns)) ^-1ba2 ### [[the more anticipated regret we have the more we hang on]] > Wong & Kwong [[16](https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0209900#pone.0209900.ref016)] studied *anticipated* regret and demonstrated that the sunk-cost effect is stronger when the possibility of future regret about withdrawal of, or continuing, commitment is high than when this possibility is low. ([View Highlight](https://read.readwise.io/read/01gma91wybwspjrrm328ejqa80)) ^gz3bk ### [[knowing why can help make decisions to quit]] > Participants who justified their decision were more resistant to the sunk-cost fallacy and showed less negative affect elicited by the scenarios, than participants who did not justify their decision. ([View Highlight](https://read.readwise.io/read/01gma97hxwvwjap1yrpy3dzkqw)) ^w4ap3 > Our findings are in line with Wong and Kwong [[16](https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0209900#pone.0209900.ref016)] who investigated the role of anticipated regret in committing the sunk-cost fallacy. They demonstrated that commitment to the fallacy is stronger when the possibility of future regret about withdrawal of commitment is high, than when this possibility is low. Besides the effect of anticipated regret about *withdrawal of commitment*, they showed an opposite effect for regret about *persistence of commitment* in escalating situations. I.e., Wong and Kwong [[16](https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0209900#pone.0209900.ref016)] found both positive and negative relationships between anticipated regret and escalation, depending on the target of the emotion (withdrawal or persistence). ([View Highlight](https://read.readwise.io/read/01gma9ahwjz2y2bmae1pyew4ky))