An fMRI study on sunk cost effect

• Sunk and incremental costs were manipulated in a decision task.
• Subjects' decisions were irrationally influenced by sunk cost (effect).
• Lateral frontal and parietal cortices etc increased activity with sunk cost.
• Striatum and medial prefrontal cortices etc decreased activity with incremental cost.
• These results favor certainty effect as account of sunk cost effect.

Sunk cost effect (also called escalation of commitment, etc) is a pervasive, interesting and famous decision bias, which has been intensively discussed in psychology, economics, management, political science, zoology, etc. To date, little has been known about the neural basis of this phenomenon. We investigated it by using functional magnetic resonance imaging (fMRI) to monitor healthy subjects' brain activities when they made decisions in a task wherein sunk cost and incremental cost were systematically manipulated. Higher sunk cost only increased activity of some brain areas (mainly lateral frontal and parietal cortices, which are involved in risk-taking), whereas lower incremental cost mainly increased activity of some brain areas (including striatum and medial prefrontal cortex, which are sensitive to rewards). No overlapping brain areas were found to respond to both sunk cost and incremental cost. These results favor certainty effect over self-justification or diminishing sensitivity as account of sunk cost effect.