Inventor Perseverance After Being Told to Quit: The Role of Cognitive Biases

36 Pages Posted: 18 Aug 2006

See all articles by Thomas B. Astebro

Thomas B. Astebro

HEC Paris - Economics and Decision Sciences

Scott Jeffrey

University of Waterloo

Gordon K. Adomdza

Northeastern University - Entrepreneurship and Innovation

Date Written: August 18, 2006

Abstract

We find that approximately one third (29%) of independent inventors continue to spend money and 51% continue to spend time on projects after receiving highly diagnostic advice to cease effort. Using survey data from actual inventors, this paper studies the role of overconfidence, optimism, and the sunk-cost bias in these decisions. We find that inventors are more overconfident and optimistic than the general population. We also find that optimism and past expenditures increased perseverance after being told to quit, while overconfidence in judgment ability had no effect. After being told to quit, optimists spend 166% more than pessimists and those having already spent, for example, $10,000 spend another $10,000.

Keywords: decision-making, optimism, inventors

JEL Classification: D80, O32

Suggested Citation

Astebro, Thomas B. and Jeffrey, Scott and Adomdza, Gordon K., Inventor Perseverance After Being Told to Quit: The Role of Cognitive Biases (August 18, 2006). Available at SSRN: https://ssrn.com/abstract=925223 or http://dx.doi.org/10.2139/ssrn.925223

Thomas B. Astebro (Contact Author)

HEC Paris - Economics and Decision Sciences ( email )

Jouy-en-Josas Cedex, 78351
France

HOME PAGE: http://www.hec.edu/Faculty-Research/Faculty-Directory/ASTEBRO-Thomas

Scott Jeffrey

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1
Canada

Gordon K. Adomdza

Northeastern University - Entrepreneurship and Innovation ( email )

Boston, MA 02115
United States

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