Cognitive Bias Sunk Cost in Marketing

Luz Maribel, Vallejo Chávez, María Fernanda, Miranda Salazar, Fabiana
María, de León Nicaretta, Vicente Ramón, Ureña Torres

The article Cognitive Biases: Sunk Cost in Marketing by Luz Maribel Vallejo Chávez and colleagues explores how the sunk cost fallacy influences consumer behavior, particularly in marketing strategies. The sunk cost bias leads individuals to continue investing in products or services based on previous costs, even when it’s not rational. This psychological tendency is widely exploited in neuromarketing to retain customers and influence purchasing decisions.

Here are three Interesting findings to consider

1. Perception of Value is Driven by Past Investment
   A striking 55% of respondents perceive a product or service as more valuable simply because they’ve invested time or money into it, even if they no longer use it. This reinforces how the sunk cost bias alters rational decision-making and suggests that people continue to value what they’ve previously invested in over objective current benefits.
2. Loyalty Programs and Reward Systems Exploit Sunk Cost
   Loyalty programs, such as accumulating points or rewards, are particularly effective in encouraging continued purchases. Around 60% of respondents admitted they are more likely to participate in such programs due to the perceived value of accumulated rewards, showing that the sunk cost bias makes consumers stick with brands even when switching might be a better option.
3. Subscriptions and Long-Term Commitments
   Over 70% of respondents admitted to maintaining subscriptions they no longer use, purely because they feel canceling would result in a “loss” of their initial investment. This highlights how companies leverage sunk cost bias to retain subscribers who are emotionally tied to their past payments rather than their current usage needs.

This study offers a clear window into how marketers can strategically apply sunk cost bias to enhance customer retention and sales, while also revealing the cognitive traps that consumers often fall into.

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