The role of sunk costs in online consumer decision-making

• The first to discuss the effects of sunk costs on online shopping in a hospitality context.
• Experimental design to examine the effects of sunk costs on the consumers’ options.
• Sunk costs have significant effects on consumer online shopping behavior.
• The sunk costs of an initial choice and a new choice had interaction effects on consumer intention.
• The sunk costs and service quality of an initial choice and new choice would affect the level of regret.

Sunk costs, which can cause inconsistencies between consumer behavior and economic theory, have been widely studied in different research areas and among various consumer groups. Nevertheless, the authors found that to date there has been no empirical research examining how sunk costs affect consumer behavior with regard to online shopping in different product types. Therefore, this study used the following 2 × 2 × 2 experimental design to study the effects of sunk costs on consumers’ online shopping decisions. The results show that (1) sunk costs have significant effects on consumer online shopping behavior. However, due to the different product characteristics, the impacts were weaker effective when consumers bought search goods than when they purchased experience goods; (2) the sunk costs (Membership fee vs. Deposit) of an initial choice and a new choice had interaction effects on consumer intention to purchase a new product; and (3) the sunk costs and service quality of an initial choice and new choice would affect the level of regret felt with regard to the consumer’s initial choice. In addition, some recommendations on market positioning and service quality design are made, which practitioners can refer to when formulating marketing strategies.