Working Paper: CEPR ID: DP9862
Authors: Nadine Ketel; Jona Linde; Hessel Oosterbeek; Bas van der Klaauw
Abstract: This paper reports on a field experiment testing for sunk-cost effects in an education setting. Students signing up for extra-curricular tutorial sessions randomly received a discount on the tuition fee. The sunk-cost effect predicts that students who receive larger discounts will attend fewer tutorial sessions. For the full sample, we find little support for this hypothesis, but we find a significant effect of sunk costs on attendance for the 45% of students in our sample who are categorized as sunk-cost prone based on hypothetical survey questions. For them higher tuition fees can serve as a commitment device to attend classes.
Keywords: Field Experiment; Higher Education; Sunk Cost Effect
JEL Codes: C93; D03; I22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher tuition fees (I22) | attendance (I29) |
| larger discounts (L42) | attendance (I29) |
| sunk cost proneness (G41) | attendance (I29) |
| attendance (I29) | performance (D29) |