| The purpose of this dissertation was to investigate sunk cost effects for both monetary and non-monetary resources. Accordingly, I conducted an extensive review of peer-reviewed literature on sunk costs. This review spanned the literature in multiple disciplines including management, marketing, organizational behavior, psychology, sociology, and accounting. While investigating sunk cost effects was an important goal for this dissertation, equally important was determining the reasons for these effects. Toward this end, I investigated theoretical explanations that have been previously proposed for the sunk cost effect. From among these and other consumer behavior theories, the theoretical explanations that seemed to best fit the context of non-monetary resources were self-justification and desire to reduce waste. Accordingly, I developed process measures (context dependent scale) and a general scale (context independent scale) for both self-justification and desire to reduce waste. These scales were rigorously tested for validity and reliability and were cross-validated across multiple samples. Next, I investigated the sunk cost effect where the initial investment was monetary and the subsequent investment was non-monetary. This study was done in the context of coupons. Here, I tested a novel idea of putting a price on coupons. I found that subjects who paid for a coupon booklet were more likely to take the effort to use it rather than those who did not pay for it. The explanation for this effect lies in consumer's desire to justify their decision to pay for the coupon. Next, I investigated the sunk cost effect for effort. Here the initial investment was effort (confounded with time) and subsequent investment was money. I tried to determine if consumers would react to sunk effort in the same manner they reacted to sunk money. I found evidence that suggested the existence of a sunk cost effect for effort but only when the decision to invest effort was voluntary. This effect was explained by the subjects' need for self-justification. |
