Tuition Fees and Sunk-cost Effects

Nadine Ketel, Jona Linde, Hessel Oosterbeek, Bas van der Klaauw

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Abstract

This article reports on a field experiment testing for sunk-cost effects in an education setting. Students signing up for extra-curricular tutorial sessions randomly received a discount on the tuition fee. The sunk-cost effect predicts that students who pay more will attend more tutorial sessions, with possibly beneficial effects on their performance. For our full sample, we find no support for this hypothesis, neither on attendance nor on performance. Results are consistent with a sunk-cost effect for the subsample of students who, based on hypothetical survey questions, are identified as sunk-cost prone. We do not find differential effects by students' income or parental contributions.

Original languageEnglish
Pages (from-to)2342-2362
Number of pages21
JournalThe Economic Journal
Volume126
Issue number598
Early online date2016
DOIs
Publication statusPublished - Dec 2016

Keywords

  • FIELD EXPERIMENT
  • ATTENDANCE
  • DECISION
  • ENTRY
  • AID

Cite this

Ketel, N., Linde, J., Oosterbeek, H., & van der Klaauw, B. (2016). Tuition Fees and Sunk-cost Effects. The Economic Journal, 126(598), 2342-2362. https://doi.org/10.1111/ecoj.12297