Tuition Fees as a Commitment Device
29 Pages Posted: 22 Feb 2014
This paper 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 receive larger discounts will attend fewer tutorial sessions. For the full sample, we find little support for this hypothesis, but we find a significant effect of sunk costs on attendance for the 45% of students in our sample who are categorized as sunk-cost prone based on hypothetical survey questions. For them higher tuition fees can serve as a commitment device to attend classes.
Keywords: sunk-cost effect, higher education, field experiment
JEL Classification: C93, D03, I22
Suggested Citation: Suggested Citation