The mental accounting of sunk time costs: Why time is not like money

The sunk-cost effect, an irrational attention to non-recoverable past costs while making current decisions, has been documented widely in the domain o f monetary costs. In this paper, I study the effect of past time investment s on current decisions. In three experiments using choice situations, I dem onstrate that the sunk-cost effect is not observed for past investments of time, but the effect reappears when the investments are expressed as moneta ry quantities. I further propose that this 'pseudo-rationality' is due to t he fact that individuals lack the ability to account for time in the same w ay as they account for money. In two additional experiments, I facilitate t he accounting of time and show that the irrational sunk-cost effect reappea rs. In a final experiment, I test my propositions in a setting where subjec ts make real investments of time and subsequently make real choices. Copyri ght (C) 2001 John Wiley & Sons, Ltd.