search query: @author Parayre, R. / total: 3
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| Author: | Parayre, R. |
| Title: | The strategic implications of sunk costs: a behavioral perspective |
| Journal: | Journal of Economic Behavior and Organization
1995 : DEC, VOL. 28:3, p. 417-442 |
| Index terms: | ECONOMIC BEHAVIOUR ORGANIZATIONS STRATEGY |
| Language: | eng |
| Abstract: | This paper examines some of the strategic implications of the sunk cost phenomenon in sequential allocation decisions. Drawing from psychology and behavioral decision theory, the author first presents a taxonomy of possible causes for the "sunk cost effect", the tendency of many managers to throw good money after bad. The author then presents the analysis of some implications of this behavior in strategic situations. A two-period strategic game is developed and analyzed to derive optimal allocations as a function of one player's sunk cost behavior. |
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