Bm. Staw et H. Hoang, SUNK COSTS IN THE NBA - WHY DRAFT ORDER AFFECTS PLAYING TIME AND SURVIVAL IN PROFESSIONAL BASKETBALL, Administrative science quarterly, 40(3), 1995, pp. 474-494
This study represents one of the first quantitative field tests of the
sunk-cost effect. We tested whether the amount teams spent for player
s in the National Basketball Association (NEA) influenced how much pla
ying time players got and how long they stayed with NEA franchises. Su
nk costs were operationalized by the order in which players were selec
ted in the college draft. Draft order was then used to predict playing
time, being traded, and survival in the NEA. Although one might logic
ally expect that teams play and keep their most productive players, we
found significant sunk-cost effects on each of these important person
nel decisions. Results showed that teams granted more playing time to
their most highly drafted players and retained them longer, even after
controlling for players on-court performance, injuries, trade status,
and position played. These results are discussed in terms of their im
plications for both sunk-cost research and the broader literature on m
anagerial decision making.