Tuition fees and sunk-cost effects

N. Ketel, J. Linde, H. Oosterbeek, B. van der Klaauw

Research output: Contribution to JournalArticleAcademicpeer-review

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
JournalEconomic Journal
Volume126
Issue number598
DOIs
Publication statusPublished - 2016

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Fees
Sunk costs
Discount
Education
Income
Attendance
Testing
Field experiment

Cite this

Ketel, N. ; Linde, J. ; Oosterbeek, H. ; van der Klaauw, B. / Tuition fees and sunk-cost effects. In: Economic Journal. 2016 ; Vol. 126, No. 598. pp. 2342-2362.
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Tuition fees and sunk-cost effects. / Ketel, N.; Linde, J.; Oosterbeek, H.; van der Klaauw, B.

In: Economic Journal, Vol. 126, No. 598, 2016, p. 2342-2362.

Research output: Contribution to JournalArticleAcademicpeer-review

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N2 - 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.

AB - 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.

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