A well-known implication of microeconomic theory is that sunk costs should have no effect on decision making. We test this hypothesis with a human-subjects experiment. Students recruited from graduate business courses, with an average of over six years of work experience, played the role of...

We investigate whether consumer-directed tax credits motivate purchasing behavior in the same manner as traditional retail concessions (e.g., price discounts). In our experimental study, consumers choose between relatively expensive incentivized products and less expensive standard products....

Although neoclassical economic theory predicts that fixed cost magnitude and fixed cost reporting format will not influence short-term pricing decisions, these factors systematically affected pricing decisions in a duopoly experiment. Increasing fixed cost magnitude (a pure sunk cost in this...