This paper provides an explanation for why the sunk cost bias persists among firms in a competitive environment in which rich learning possibilities are allowed. We envision firms that experiment with cost methodologies that are consistent with real-world accounting practices, including ones...

DAVID A. BESANKO Northwestern University, Kellogg School of Management RONALD R. BRAEUTIGAM Northwestern University, Department of Economics with Contributions from Michael J. Gibbs The University of Chicago, Booth School of Business WILEY WflLEY ft SOWS, INC. ...

Learning-by-doing and organizational forgetting have been shown to be important in a variety of industrial settings. This paper provides a general model of dynamic competition that accounts for these economic fundamentals and shows how they shape industry structure and dynamics. Previously...