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A Meta-Analysis of the Sunk Cost Effect on Project Escalation
Abstract
Escalation is a serious management problem and sunk costs can promote escalation behavior. While many laboratory experiments have been conducted to examine the sunk cost effect on escalation, there has been no effort to examine these studies as a group in order to determine the effect size associated with the so-called “sunk cost effect.” Using metaanalysis, we analyzed the results of 20 sunk cost experiments and found: (1) a large effect size associated with sunk costs, (2) variability of effect sizes across experiments that was larger than pure subject-level sampling error, and (3) stronger effects in experiments involving IT projects as opposed to non-IT projects. Implications of the results and future research directions are discussed.
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