Porter effect vs cost effect: The impact of China's low carbon city pilot on carbon emissions and economic performance.

Building a low-carbon economy can help cities effectively mitigate climate risks, but it is challenging for developing countries. Using a difference-in-difference and event study model, we investigate the joint impact of China's Low-Carbon City Pilot (LCCP) on carbon emissions and economic performance. Our findings show that the LCCP significantly reduces carbon emissions and increases gross revenues, employee count, and fixed assets without compromising the net profit of manufacturing firms. The LCCP has a cumulative effect, with the positive joint impact increasing gradually over time. A heterogeneity analysis shows that the later pilot cities have not achieved better carbon emissions and economic performance than the early pilot cities. The reason for the positive joint effect of LCCP is that the Porter effect outweighs the cost effect. These findings contribute to knowledge about how developing countries can develop a low-carbon economy.

The impact of statistical properties of incremental monetary net benefit and incremental cost-effectiveness ratio on health economic modeling choices.

INTRODUCTION: There is controversy on whether to use incremental monetary net benefit (INMB) or incremental cost-effectiveness ratio (ICER) in health economic evaluations alongside randomized controlled trials. We studied the impact of restricted mean survival time (RMST) on the long-term projection of INMB and ICER. METHODS: We analyzed the unbiasedness and efficiency of ICER and INMB by (1) deriving the metrics' expected values and variances based on theoretical probability distributions, (2) simulating their 15-year post-trial projections based on between-arm-RMST-gained through a 2 × 4 × 2 factorial experiment of Markov 2-state microsimulations. Simulations and comparison were run on the data from the Cardiovascular Outcomes for People Using Anticoagulation Strategies Study (COMPASS). RESULTS: Our simulation findings using RMST showed that ICER was more efficient than INMB, regardless of disease populations, time horizon, modeling choices, and underlying probability distributions of incremental mean cost and effect. ICER had a small variance and thus showed its robustness to the choices of models. CONCLUSION: INMB's variance varies with a willingness-to-pay (WTP) threshold quadratically while ICER's variance with a WTP threshold value quadratically while ICER's variance with incremental-mean-cost quadratically. A simple and naïve model can sufficiently estimate ICER. Future metrics are expected to be health-economic-meaningful, unambiguous, unbiased, efficient, and statistical-inference-friendly.

Does ambient air quality standard contribute to green innovation of enterprises in China? Implications for environmental protection and public health.

In the post-COVID-19 era, environmental pollution has been a serious threat to public health. Enterprises are in urgent need of enhancing green technology innovation as the main source of pollutant emissions, and it is necessary for governments to support green innovation of enterprises to reduce pollutant emissions and promote public health. In this context, this paper investigates whether the Ambient Air Quality Standard (AAQS) implemented in 2012 in China contributes to green innovation of enterprises, to provide implications for environmental protection and public health. By using panel data of Chinese A-share listed companies from 2008 to 2020, this study adopts the difference-in-difference model to analyze the policy impact of environmental regulation on green innovation of enterprises and its internal mechanism. The results show that AAQS has significantly improved the green innovation of enterprises. Furthermore, AAQS affects the green innovation of enterprises by virtue of two mechanism paths: compliance cost effect and innovation offset effect. On the one hand, AAQS leads to an increase in production costs of enterprises, thus inhibiting green innovation activities of enterprises. On the other hand, AAQS encourages enterprises to increase R&D investment in green technology, thus enhancing their green innovation. In addition, the impact of AAQS on firms' green innovation has heterogeneous characteristics. Our findings not only enrich the studies of environmental regulation and green innovation of enterprises but also provide policymakers in China and other developing countries with implications for environmental protection and public health improvement.

The role of artificial intelligence based systems for cost optimization in colorectal cancer prevention programs.

Colorectal Cancer (CRC) has seen a dramatic increase in incidence globally. In 2019, colorectal cancer accounted for 1.15 million deaths and 24.28 million disability-adjusted life-years (DALYs) worldwide. In India, the annual incidence rates (AARs) for colon cancer was 4.4 per 100,000. There has been a steady rise in the prevalence of CRC in India which may be attributed to urbanization, mass migration of population, westernization of diet and lifestyle practices and a rise of obesity and metabolic risk factors that place the population at a higher risk of CRC. Moreoever, CRC in India differs from that described in the Western countries, with a higher proportion of young patients and more patients presenting with an advanced stage. This may be due to poor access to specialized healthcare and socio-economic factors. Early identification of adenomatous colonic polyps, which are well-recognized pre-cancerous lesions, at the time of screening colonoscopy has been shown to be the most effective measure used for CRC prevention. However, colonic polyps are frequently missed during colonoscopy and moreover, these screening programs necessitate man-power, time and resources for processing resected polyps, that may hamper penetration and efficacy in mid- to low-income countries. In the last decade, there has been significant progress made in the automatic detection of colonic polyps by multiple AI-based systems. With the advent of better AI methodology, the focus has shifted from mere detection to accurate discrimination and diagnosis of colonic polyps. These systems, once validated, could usher in a new era in Colorectal Cancer (CRC) prevention programs which would center around "Leave in-situ" and "Resect and discard" strategies. These new strategies hinge around the specificity and accuracy of AI based systems in correctly identifying the pathological diagnosis of the polyps, thereby providing the endoscopist with real-time information in order to make a clinical decision of either leaving the lesion in-situ (mucosal polyps) or resecting and discarding the polyp (hyperplastic polyps). The major advantage of employing these strategies would be in cost optimization of CRC prevention programs while ensuring good clinical outcomes. The adoption of these AI-based systems in the national cancer prevention program of India in accordance with the mandate to increase technology integration could prove to be cost-effective and enable implementation of CRC prevention programs at the population level. This level of penetration could potentially reduce the incidence of CRC and improve patient survival by enabling early diagnosis and treatment. In this review, we will highlight key advancements made in the field of AI in the identification of polyps during colonoscopy and explore the role of AI based systems in cost optimization during the universal implementation of CRC prevention programs in the context of mid-income countries like India.

Structured expert elicitation to inform long-term survival extrapolations using alternative parametric distributions: a case study of CAR T therapy for relapsed/ refractory multiple myeloma.

BACKGROUND: Our aim was to extend traditional parametric models used to extrapolate survival in cost-effectiveness analyses (CEAs) by integrating individual-level patient data (IPD) from a clinical trial with estimates from experts regarding long-term survival. This was illustrated using a case study evaluating survival of patients with triple-class exposed relapsed/refractory multiple myeloma treated with the chimeric antigen receptor (CAR) T cell therapy idecabtagene vicleucel (ide-cel, bb2121) in KarMMa (a phase 2, single-arm trial). METHODS: The distribution of patients expected to be alive at 3, 5, and 10 years given the observed survival from KarMMa (13.3 months of follow-up) was elicited from 6 experts using the SHeffield ELicitation Framework. Quantities of interest were elicited from each expert individually, which informed the consensus elicitation including all experts. Estimates for each time point were assumed to follow a truncated normal distribution. These distributions were incorporated into survival models, which constrained the expected survival based on standard survival distributions informed by IPD from KarMMa. RESULTS: Models for ide-cel that combined KarMMa data with expert opinion were more consistent in terms of survival as well as mean survival at 10 years (survival point estimates under different parametric models were 29-33% at 3 years, 5-17% at 5 years, and 0-6% at 10 years) versus models with KarMMa data alone (11-39% at 3 years, 0-25% at 5 years, and 0-11% at 10 years). CONCLUSION: This case study demonstrates a transparent approach to integrate IPD from trials with expert opinion using traditional parametric distributions to ensure long-term survival extrapolations are clinically plausible.

Sunk costs under stress: Acute stress reduces the impact of past expenses on risky decisions.

Rational choice should be guided solely by the prospects of available options. However, our decisions are often influenced by irrecoverable past costs, even when the current course of action turns out to be unfavorable, reflecting a cognitive bias known as the "sunk-cost effect". In everyday life, many decisions are made under stress or elicit stress themselves. Whether and how stress impacts the sunk-cost effect, however, is not known. Based on evidence suggesting that the sunk-cost effect critically depends on the dorsolateral prefrontal cortex, which in turn is highly sensitive to stress, we hypothesized that stress may reduce the influence of past expenses on current decisions. Participants underwent a psychosocial stress manipulation or control procedure, before we assessed their sunk-cost tendency in a monetary investment task. Overall, participants showed a pronounced sunk-cost effect, particularly for options with low expected value. Acute stress reduced this tendency to invest in risky options with low probability of success following high prior investments. Moreover, the strength of this reduction of the sunk-cost effect was predicted by individual cortisol reactivity. These findings show that acute stress may reduce the impact of past expenses on current choice and that this effect may be mediated by glucocorticoid action.

A Randomized Trial Investigating the Cost-Utility of Patient-Specific Instrumentation in Total Knee Arthroplasty in an Obese Population.

BACKGROUND: Patient-specific instrumentation (PSI) has been introduced in total knee arthroplasty (TKA) with the goal of increased accuracy of component positioning by custom fitting cutting guides to the patient's bony anatomy. A criticism of this technology is the associated cost. The purpose of this randomized controlled trial was to determine the cost-utility of PSI compared with standard of care (SOC) instrumentation for TKA in an obese population. METHODS: Patients with body mass index greater than 30 with osteoarthritis and undergoing primary TKA were randomized to SOC or PSI. Patients completed a health care resource use diary and the EuroQol-5D at three, six, nine, and 12 months and the Western Ontario and McMaster Universities Osteoarthritis Index at three and 12 months postsurgery. We performed cost-utility and cost-effectiveness analyses from public health care payer and societal perspectives. RESULTS: One hundred seventy-three patients were included in the analysis with 86 patients randomized to PSI and 87 to SOC. PSI was dominated (more costly and less effective) by SOC from a health care payer perspective. From a societal perspective, an incremental cost-utility ratio was calculated at $11,230.00 per quality-adjusted life year gained, which is cost-effective at a willingness to pay threshold of $50,000. Net benefit analyses found PSI was not significantly cost-effective at any willingness to pay value from either perspective. CONCLUSION: Our results suggest that widespread adoption of PSI may not be economically attractive or clinically indicated. Future considerations are to compare long-term clinical outcomes and radiographic alignment between the groups.

Enhanced recovery of phosphate as a value-added product from wastewater by using lanthanum modified carbon-fiber.

The aim of this study is to present the potential of activated carbon fiber (CF) impregnated with lanthanum (La) as a novel adsorbent (La-CF) of phosphate-phosphorus (P) and to assess the value-added due to P-recovery from wastewater using La-CF. The CF were loaded with La and the loaded CF was then calcined at 500 °C. The La-CF adsorbent was used in a series of batch experiments to characterize the adsorption of P at pH of 6-10 and P concentrations of 1-200 mg/L. Physical-chemical properties such as surface morphology, surface charge, surface area, and surface chemistry were determined for the La-CF. The La-CF exhibited adsorption capacity of 196.5 mg/g, fast sorption kinetics and high selectivity for P removal from aqueous solution. La-CF removed 97.3% of P from wastewater and achieved P-level to below 2 mg/L. It was repetitively reused over 10 times in successive cycles to remove P from wastewater. The value-added by recovery of P from wastewater was calculated at around 0.12 US$/L, demonstrating economic benefits of La-CF. In conclusion, the successful removal, recycling, and recovery value-added of P using La-CF adsorbent displayed good potential for developing the technology for treatment of wastewaters to recover valuable compounds such as phosphorus.

Eliminating buyer's remorse: An examination of the sunk cost fallacy in the National Hockey League draft.

The sunk cost effect describes the tendency to escalate one's commitment toward a certain endeavor, despite diminishing returns, as a consequence of irreversible resource expenditure that has already been made (Organ Behav Hum Decis Process. 1985;35:124). This effect has been observed in a number of professional sports leagues, wherein teams escalate their commitment toward players selected early in the draft, regardless of performance outcomes, due to large financial commitments invested in them (J Sports Econom. 2017;18:282; Adm Sci Q. 1995;40:474). This effect, however, has yet to be explored in the National Hockey League (NHL). The purpose of this study was to test for sunk cost effects in the NHL, by examining the relationship between draft order and playing time, while controlling for a myriad of confounding variables. Findings from our analyses provide support for the existence of this effect in the NHL, as first-round draftees were given significantly more playing time than their peers selected in the second round, regardless of injury, player relocation, penalties, or on-ice performance outcomes. We offer some plausible underlying mechanisms driving this effect. Furthermore, we suggest the observed effects have valuable implications for NHL talent development, given the importance of playing time on various aspects of expertise attainment.

Harm to others reduces the sunk-cost effect.

The sunk-cost effect (SCE) is the tendency to continue investing in something that is not working out because of previous investments that cannot be recovered. In three experiments, we examine the SCE when continued investment violates the ethic of care by harming others. In Experiment 1, the SCE was smaller if the sunk-cost decision resulted in harmful consequences towards others (an interaction between sunk cost and the ethic of care). In Experiment 2, participants considered vignettes from their own or another person's perspective. We observed an interpersonal SCE - people showed the SCE when taking the perspective of others. We did not replicate the interaction found in Experiment 1. In Experiment 3, we used statistically more powerful analyses - Bayesian sequential hypothesis testing - to examine the interaction between sunk cost and the ethic of care. We found evidence in favor of the interaction; the SCE was smaller if the sunk-cost decision harmed others. We suggest that violating one's ethic of care de-biases decision-making by overshadowing sunk costs. These findings may help explain decision-making in real-world situations involving large investments.

A protocol for a randomized controlled trial investigating the safety and cost-effectiveness of outpatient total hip arthroplasty.

BACKGROUND: A significant proportion of the overall cost of total hip arthroplasty (THA) results from the inpatient hospital stay following the procedure. Considering the substantial and increasing number of these procedures performed annually, shifting to an outpatient model of care where the patient is discharged home the same day as their surgery represents a potential for significant cost savings. The potential significant impact of an outpatient care model on constrained healthcare budgets and lack of high-quality evidence regarding its effectiveness warrants a rigorous comparative trial. The purpose of this prospective, randomized controlled trial is to evaluate outpatient care pathways for THA. Specifically, our objectives are to compare the rate of serious adverse events and estimate the cost-effectiveness of outpatient compared to standard inpatient THA. METHODS: We will include patients undergoing primary THA whom have an American Society of Anaesthetists status equal to or less than three, live within a 60-min driving distance of the institution and have an adult to accompany them home postoperatively and stay with them overnight. Consenting patients will be randomized to be discharged on the same day as surgery, as outpatients, or as inpatients according to standard of care (minimum of one night in hospital) using a modified Zelen consent model. The primary outcome measure is the incidence of serious adverse events at 30 days postoperative. Participants and their caregivers will complete secondary outcomes measures at each follow-up visit including patient-reported outcome measures and self-reported cost questionnaires. DISCUSSION: This protocol is the first randomized trial to use blinding to evaluate outpatient THA compared to standard overnight stay and first to prospectively perform a full economic evaluation. It is also the first adequately powered trial to prospectively assess the safety of outpatient THA. Successful completion of this study could have the potential to provide clinical evidence for the role of outpatient THA in current practice. TRIAL REGISTRATION: This study was retrospectively registered on ClinicalTrials.gov ( NCT03026764 ) on March 9th, 2016.

Sustained acoustic medicine as a non-surgical and non-opioid knee osteoarthritis treatment option: a health economic cost-effectiveness analysis for symptom management.

BACKGROUND: Patients diagnosed with osteoarthritis (OA) and presenting with symptoms are seeking conservative treatment options to reduce pain, improve function, and avoid surgery. Sustained acoustic medicine (SAM), a multi-hour treatment has demonstrated improved clinical outcomes for patients with knee OA. The purpose of this analysis was to compare the costs and effectiveness of multi-hour SAM treatment versus the standard of care (SOC) over a 6-month timeframe for OA symptom management. METHODS: A decision tree analysis was used to compare the costs and effectiveness of SAM treatment versus SOC in patients with OA. Probabilities of success for OA treatment and effectiveness were derived from the literature using systematic reviews and meta-analyses. Costs were derived from Medicare payment rates and manufacturer prices. Functional effectiveness was measured as the effect size of a therapy and treatment pathways compared to a SOC treatment pathway. A sensitivity analysis was performed to determine which cost variables had the greatest effect on deciding which option was the least costly. An incremental cost-effectiveness plot comparing SAM treatment vs. SOC was also generated using 1000 iterations of the model. Lastly, the incremental cost-effectiveness ratio (ICER) was calculated as the (cost of SAM minus cost of SOC) divided by (functional effectiveness of SAM minus functional effectiveness of SOC). RESULTS: Base case demonstrated that over 6 months, the cost and functional effectiveness of SAM was $8641 and 0.52 versus SOC at: $6281 and 0.39, respectively. Sensitivity analysis demonstrated that in order for SAM to be the less expensive option, the cost per 15-min session of PT would need to be greater than $88, or SAM would need to be priced at less than or equal to $2276. Incremental cost-effectiveness demonstrated that most of the time (84%) SAM treatment resulted in improved functional effectiveness but at a higher cost than SOC. CONCLUSION: In patients with osteoarthritis, SAM treatment demonstrated improved pain and functional gains compared to SOC but at an increased cost. Based on the SAM treatment ICER score being ≤ $50,000, it appears that SAM is a cost-effective treatment for knee OA.

The Wastage and Economic Effects of Anaesthetic Drugs and Consumables in the Operating Room.

OBJECTIVE: Anaesthesia is a branch in which new anaesthetic drugs, devices, instruments and new treatment methods have been developed. Because of these innovations, health expenditures have escalated. Anaesthetic drugs and consumables constitute the majority of these expenses. Some waste of used drugs and consumables in the operating room is unavoidable. However, excessive drug wastage can be controlled. One of the ways to reduce the financial burden of this wastage is to know the loss cost. This study aimed to discuss the effect of the wastage of drugs and consumables. METHODS: This prospective observational study was conducted in a hospital operating room over a six-week period. At the end of each operation and at the end of each operation day, the amount of wasted and consumables was recorded. The total wastage of the drugs and consumables was calculated by multiplying unit prices. RESULTS: Data of 363 cases were collected during the study period. The total loss cost calculated during the study period was 2545.77 TL. The highest total loss cost was rocuronium (29.95%) and propofol (27.99%). The least loss was neostigmine (0.06%). The consumption rate of consumables was lower than that of drugs. CONCLUSION: A significant amount of drug wastage was recorded during the study period. This can be reduced by simple means. These applications vary from physician behavioural change to the preparation of standard doses of single-dose preparations. Cost training programmes at regular intervals can also be used as a cost-reduction strategy.

The third route: Using extreme decentralization to create resilient urban water systems.

For much of the world's urban population, centralized treatment plants and pipe networks built in the nineteenth and twentieth centuries provide homes with water and a means of disposing of the resulting wastewater. Due to the real or perceived inability of existing systems to deliver safe and palatable water, many users apply additional treatment prior to consumption. Where piped water supply is lacking, drinking water is obtained through water vendors at considerable cost. Despite economic inefficiencies and public health risks inherent in these two water supply systems, the high sunk costs of existing water infrastructure along with low returns on investment and the inflexible nature of the institutions involved in water provision have slowed down the diffusion of alternative approaches that may prove to be less expensive, more adaptable and safer than the current system. We advocate a third, complementary route: household-based personalized water systems. Initially, relatively affluent people expecting more functionality and sustainability from water systems will invest in personalized water systems that allow them to tailor their water to their personal preferences. This approach will tap into the tremendous creativity-base of individual users and entrepreneurs, facilitating the type of co-creation that accelerated the rapid development of consumer electronics. Competition among manufacturers and economies of scale that accrue as these systems become more popular will lead to rapid innovation that drives down costs, improves performance and expands access. These solutions complement emerging approaches for sanitation and resource recovery that do not rely upon sewers for the management of human waste.

Impact of past experiences on decision-making in autism spectrum disorder.

People are often influenced by past costs in their current decision-making, thus succumbing to a well-known bias recognized as the sunk cost effect. A recent study showed that the sunk cost effect is attenuated in individuals with autism spectrum disorder (ASD). However, the study only addressed one situation of utilization decision by focusing on the choice between similar attractive alternatives with different levels of sunk costs. Thus, it remains unclear how individuals with ASD behave under sunk costs in different types of decision situations, particularly progress decisions, in which the decision-maker allocates additional resources to an initially chosen alternative. The sunk cost effect in progress decisions was estimated using an economic task designed to assess the effect of the past investments on current decision-making. Twenty-four individuals with ASD and 21 age-, sex-, smoking status-, education-, and intelligence quotient-level-matched typical development (TD) subjects were evaluated. The TD participants were more willing to make the second incremental investment if a previous investment was made, indicating that their decisions were influenced by sunk costs. However, unlike the TD group, the rates of investments were not significantly increased after prior investments in the ASD group. The results agree with the previous evidence of a reduced sensitivity to context stimuli in individuals with ASD and help us obtain a broader picture of the impact of sunk costs on their decision-making. Our findings will contribute to a better understanding of ASD and may be useful in addressing practical implications of their socioeconomic behavior.

Sunk Cost Effect in Individuals with Autism Spectrum Disorder.

The sunk cost effect, an interesting and well-known decision bias, is pervasive in real life and has been studied in various disciplines. In this study, we modified a task exemplifying the sunk cost effect and used it to evaluate this behavior in individuals with autism spectrum disorder (ASD). The control group exhibited a typical sunk cost effect in our task. We found that the sunk cost effect was lower in the ASD group than in the control group. The results agree with previous evidence of reduced sensitivity to context stimuli in individuals with ASD and extend this finding to the context of the sunk cost effect. Our findings are useful in addressing the practical implications on their socioeconomic behavior.

Cost effect of surgeon and patient discretion in regard to cataract surgery.

PURPOSE: The purpose of this study is to examine the cost effect of surgeon and patient discretion in regard to cataract surgery and how this affects population health care costs. METHODS: A model of cataract progression was created from preexisting published data and combined with mortality data and Medicare cataract statistics to estimate the effect of mortality on decreasing the rate of cataract surgery if surgery was delayed until any cataract progression occurred. RESULTS: Five-year cataract progression rates were determined for a given patient age, sex, and type of cataract. Combined with 5-year death rates, delaying surgery until progression occurred resulted in a 1.1% decrease in surgery for nuclear sclerosis at age 45 that increased to a 33.8% decrease by age 90; a 1.5% decrease in surgery for cortical cataract at age 45 that increased to a 51.1% decrease by age 90; and a 1.6% decrease in surgery for posterior subcapsular at age 45 that increased to a 59.7% decrease by age 90. The effect of this decrease in surgical volume on Medicare was estimated to result in a 13% overall decrease in cataract surgery annually at a cost of ~$660 million dollars per year. CONCLUSION: Overall, we conclude that surgeon and patient discretion in regard to cataract surgery has a substantial cost effect with the potential to reduce surgical volume by as much as 13% by the decision to delay surgery as a result of patient mortality.

An fMRI study of decision-making under sunk costs in gambling disorder.

The sunk cost effect is the tendency to continue an investment, or take an action, even though it has higher future costs than benefits, if costs of time, money, or effort were previously incurred. This type of decision bias is pervasive in real life and has been studied in various disciplines. Previous studies and clinical observations suggest that decision-making under sunk costs is altered in gambling disorder (GD). However, the neural mechanisms of decision-making under sunk costs in GD remain largely unknown, and so is their association with the clinical characteristics of this patient group. Here, by combining functional magnetic resonance imaging and the task that demonstrated a clear example of the sunk cost effect, we investigated the neural correlates during decision-making under sunk costs in GD. We found no significant differences in the strength of the sunk cost effect between the GD and healthy control (HC) groups. However, the strength of the sunk cost effect in patients with GD showed a significant negative correlation with abstinence period and a marginally significant positive correlation with the duration of illness. We also found a reduction in the neural activation in the dorsal medial prefrontal cortex during decision-making under sunk costs for the GD group compared with the HC group. Furthermore, in patients with GD, the levels of activation in this area negatively correlated with the duration of illness. These findings have important clinical implications. This study will contribute to a better understanding of the mechanisms underlying altered decision-making abilities in GD.

Motivational Reasons for Biased Decisions: The Sunk-Cost Effect's Instrumental Rationality.

The present study describes the mechanism of need regulation, which accompanies the so-called "biased" decisions. We hypothesized an unconscious urge for psychological need satisfaction as the trigger for cognitive biases. In an experimental study (N = 106), participants had the opportunity to win money in a functionality test. In the test, they could either use the solution they had developed (sunk cost) or an alternative solution that offered a higher probability of winning. The selection of the sunk-cost option (SCO) was the most chosen option, supporting the hypothesis of this study. The reason behind the majority of participants choosing the SCO seemed to be the satisfaction of psychological needs, despite a reduced chance of winning money. An intervention, which aimed at triggering self-reflection, had no impact on the decision. The findings of this study contribute to the discussion on the reasons for cognitive biases and their formation in the human mind. Moreover, it discusses the application of the label "irrational" for biased decisions and proposes reasons for instrumental rationality, which exist at an unconscious, need-regulative level.

How does cognitive dissonance influence the sunk cost effect?

BACKGROUND: The sunk cost effect is the scenario when individuals are willing to continue to invest capital in a failing project. The purpose of this study was to explain such irrational behavior by exploring how sunk costs affect individuals' willingness to continue investing in an unfavorable project and to understand the role of cognitive dissonance on the sunk cost effect. METHODS: This study used an experimental questionnaire survey on managers of firms listed on the Taiwan Stock Exchange and Over-The-Counter. RESULTS: The empirical results show that cognitive dissonance does not mediate the relationship between sunk costs and willingness to continue an unfavorable investment project. However, cognitive dissonance has a moderating effect, and only when the level of cognitive dissonance is high does the sunk cost have significantly positive impacts on willingness to continue on with an unfavorable investment. CONCLUSION: This study offers psychological mechanisms to explain the sunk cost effect based on the theory of cognitive dissonance, and it also provides some recommendations for corporate management.