ISSN 2292-9355 Login Register
Call for Paper - August 2020 Edition
JORM solicits original research papers for the August 2020 Edition of JORM. The date of manuscript submission is Open
Read More

Email this article (login required)

Demystifying the "Sunk Cost Fallacy": When Considering Fixed Cost in Decision-Making is Reasonable

Andreas Krämer


dapatkan informasi Berita terkini paling update

Economic theory explains that when making decisions, historical costs should be irrelevant. When people are influenced by sunk costs in their decision-making, they are said to be committing the “sunk cost fallacy”, summarized by Kelly (2004) as the conjunction of two claims: (1) Individuals often do give weight to sunk costs in their decision-making, and (2) it is irrational for them to do so. Based on three studies both aspects are investigated (Amazons loyalty program Prime, German railways discount card BahnCard and decisions to use the own car when making long-haul trips). There are strong indicators that in all three examples fixed costs play a crucial role when consumers make decisions; and doing so is not necessarily irrational.


sunk cost fallacy; Amazon Prime; BahnCard; online survey; heuristics

Full Text:

Number of downloads: 1876

Full Text: PDF


  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

Quick Link

Journal Content

  • Search

Peer Review

JORM introduces peer-review from its first Edition onwards. The researchers submitting their papers for publication should review atleast one technical paper from their domain. The manuscript also undergoes mandatory procedural review with JORM review and scholar panel.