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Apparent sunk cost effect in rational agents

In a recent study of economic decisions, humans, mice, and rats were reported to succumb to the sunk cost fallacy, making decisions based on irrecoverable past investments to the detriment of expected future returns. We challenge this interpretation because it is subject to a statistical fallacy, a form of attrition bias, and the observed behavior can be explained without invoking a sunk cost–dependent mechanism. Using a computational model, we illustrate how a rational decision maker with a reward-maximizing decision strategy reproduces the reported behavioral pattern and propose an improved task design to dissociate sunk costs from fluctuations in decision valuation. Similar statistical confounds may be common in analyses of cognitive behaviors, highlighting the need to use causal statistical inference and generative models for interpretation.
#sunk-costs - science.org

Animals, like humans, place a higher value on what requires more effort.

We have examined the justification of effort effect in animals and found a pattern similar to the one in humans but we propose a simpler underlying mechanism: contrast between the greater effort and the resulting reward that follows. The contrast model predicts that any relatively aversive event will result in a preference for a reward (or for the signal of a reward) that follows. Much evidence supports this model: Signals for reward are preferred if they are preceded by having to make a greater number of responses, encountering a longer delay, or experiencing the absence of food (when food is presented on other trials). Contrast has also been found when the signals are associated with greater rather than less food restriction. We have also found a shift toward the preference of a food location that requires greater effort to obtain. Analogous effects have been found in humans (both children and adults) using similar procedures.
#managing #econ #investing #animals #sunk-costs - animalstudiesrepository.org