Tuition Fees as a Commitment Device

29 Pages Posted: 22 Feb 2014

See all articles by Nadine Ketel

Nadine Ketel

Vrije Universiteit Amsterdam; University of Gothenburg - Department of Economics and Statistics; IZA Institute of Labor Economics; University of Amsterdam; Tinbergen Institute; CEPR

Jona Linde

CREED, Amsterdam School of Economics

Hessel Oosterbeek

University of Amsterdam - Research Institute in Economics & Econometrics (RESAM); Tinbergen Institute Amsterdam (TIA); Institute for the Study of Labor (IZA)

Bas van der Klaauw

VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Tinbergen Institute

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Abstract

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

Ketel, Nadine and Linde, Jona and Oosterbeek, Hessel and van der Klaauw, Bas, Tuition Fees as a Commitment Device. IZA Discussion Paper No. 7951, Available at SSRN: https://ssrn.com/abstract=2399770

Nadine Ketel (Contact Author)

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
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University of Gothenburg - Department of Economics and Statistics ( email )

Box 640
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IZA Institute of Labor Economics ( email )

P.O. Box 7240
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Germany

University of Amsterdam ( email )

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Amsterdam, 1018 WB
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Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

CEPR ( email )

London
United Kingdom

Jona Linde

CREED, Amsterdam School of Economics ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Hessel Oosterbeek

University of Amsterdam - Research Institute in Economics & Econometrics (RESAM) ( email )

Roetersstraat 11
Amsterdam
Netherlands
+31 20 525 4242 (Phone)
+31 20 525 5283 (Fax)

HOME PAGE: http://www.fee.uva.nl/scholar/oosterbeek/

Tinbergen Institute Amsterdam (TIA)

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Bas Van der Klaauw

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6120 (Phone)
+31 20 444 6005 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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