Blind to Bias? Young Children Do Not Anticipate that Sunk Costs Lead to Irrational Choices

Abstract

Young children anticipate that others act rationally in light of their beliefs and desires, and environmental constraints. However, little is known about whether children anticipate others’ irrational choices. We investigated young children's ability to predict that sunk costs can lead to irrational choices. Across four experiments, 5‐ to 6‐year‐olds (total N = 185) and adults (total N = 117) judged which of two identical objects an agent would keep, one obtained at a high cost or one obtained at a low cost. In Experiment 1, adults predicted that the agent would choose the high‐cost object over the low‐cost one, whereas children responded at chance. Experiment 2 replicated these findings in children, but also included another condition which showed they were sensitive to future costs. They predicted that an agent would be more likely to seek out a low‐cost item than a high‐cost item. Experiments 3 and 4 then found that children do not anticipate the sunk cost bias in first person scenarios, or in interpersonal sunk cost scenarios, where costs are sunk by others. Taken together, our findings suggest that young children may struggle to understand and predict irrational behavior. The findings also reveal an asymmetry between how they consider sunk costs and future costs in understanding actions. We propose that this asymmetry might arise because children do not consider sunk costs as wasted.

Ownership and Value in Childhood

“…Children aged 4 to 12 do expect others to prefer handmade objects over those created in a factory(DeJesus et al 2022). But in contrast with adults, 6-year-olds do not anticipate that a story character is more likely to keep an item that was laborious and effortful to obtain over an item that was acquired easily(Sehl et al 2021).…”

The role of effort type and intensity in children's decisions about effort‐based outcomes

“…Though the current study contributes to a growing body of work documenting sophistication in children's reasoning about effort, in many contexts, children fail to show adult‐like reasoning about effort. For example, a recent study by Sehl et al (2021) showed that young children, unlike adults, are insensitive to sunk costs—they fail to view sunk costs as “wasted effort”, and therefore struggle to predict irrational behaviour.…”

A Revisit to Sunk Cost Fallacy for Two-Stage Stochastic Binary Decision Making

“…Studies also delve into diverse contexts, enriching our understanding of sunk costs' influence. Sehl et al [10] contrast children's and adults' anticipation of sunk costs, indicating developmental differences in decision making. Jhang et al [11] connect childhood environments to the sunk-cost fallacy, while Perignat and Fleming [12] explore its manifestation in research project termination, elucidating its implications in various settings.…”