Work

Tuition Fees and Sunk-cost Effects

Year: 2015

Type: article

Abstract: This article reports on a field experiment testing for sunk‐cost effects in an education setting. Students signing up for extra‐curricular tutorial sessions randomly received a discount on the tuition fee. The sunk‐cost effect predicts that students who pay more will attend more tutorial sessions, with possibly beneficial effects on their performance. For our full sample, we find no support for this hypothesis, neither on attendance nor on performance. Results are consistent with a sunk‐cost effect for the subsample of students who, based on hypothetical survey questions, are identified as sunk‐cost prone. We do not find differential effects by students’ income or parental contributions.

Source: The Economic Journal

DOI: 10.1111/ecoj.12297

Authors: Nadine Ketel, Jona Linde, Hessel Oosterbeek, Bas van der Klaauw

Institutions: Tinbergen Institute, Vrije Universiteit Amsterdam, University of Amsterdam

Language: English

Topic: Decision-Making and Behavioral Economics

Subfield: General Decision Sciences

Field: Decision Sciences

Domain: Social Sciences

SDG: Quality education

Open Access status: green

Funder: Universiteit van Amsterdam