Sunk Cost Bias and Time Inconsistency: A Strategic Analysis of Pricing Decisions
研究发现，当消费者存在沉没成本偏差和时间不一致偏好时，沉没成本可能通过激励更高努力来改善消费者福利，企业定价策略如零利率融资可能降低总价格、提高利润和福利。
It is generally acknowledged that sunk cost bias leads to suboptimal decisions, such as escalation of commitment. Some researchers, however, suggest that sunk cost bias can be beneficial when consumers have self-control problems. In this paper we explore the case when consumers with sunk cost bias have time-inconsistent preferences and, therefore, suffer from self-control problems. We experimentally demonstrate that sunk costs can make subjects better off by inducing higher effort. We then develop an analytical model to explore the implications of sunk cost bias for firm’s pricing strategy. We find that, in the presence of sunk cost bias, higher prices can lead to higher experienced quality. We show that sunk cost bias can sometimes improve firm’s profits, lead to lower prices, and increase welfare. Our results suggest that, when consumers use a product for multiple periods, pricing policies such as 0% financing, which are often viewed as exploitative, can instead lead to lower total prices, higher profits, and higher welfare. This paper was accepted by Matthew Shum, marketing. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2022.4479 .