In the context of loss aversion, identify the true statement about sunk-cost fallacy.
A)People ascribe greater value to things they already own when compared with objects owned by someone else.
B)People disregard prior experiences or failures when making predictions about the possibility of an outcome.
C)People are reluctant to give up on a venture because of past investment.
D)People tend to report falsely, after the fact, that they accurately predicted an outcome.

Question

Quizplus · Accepted Answer

Sunk-cost fallacy refers to the tendency of individuals to continue investing in something (such as a business or a project) because of the resources they have already invested, even if there is little or no hope of the investment being profitable. This is because people feel that they have already "sunk" costs into the venture, and they don't want to give up on it. Therefore, option C is the correct statement for sunk-cost fallacy. Options A and B are related to other aspects of loss aversion and cognitive biases, and option D is related to hindsight bias.

In the Context of Loss Aversion, Identify the True Statement