Effects of Sunk Cost Bias on Decision Making

ABSTRACT Cognitive biases a well-known phenomenon where individuals process and interpret information in a way that aligns with their existing beliefs, attitudes, and preferences. This thesis aims to provide critical evidence on the sunk-cost effect on professionals within the Management and Finance industry. As a result, this Thesis covers literature on cognitive biases and the emergence of biases in our mode of thinking, emphasizing the effects of sunk-cost and how susceptible we are to Cognitive Biases. To accomplish this goal, a quantitative approach was used, analyzing an online survey. The survey aimed to assess the level of cognitive bias in decision-making and the extent to which sunk cost affects outcomes. The study found that cognitive biases prevalent in the decision-making process of professionals. Overall, this master thesis emphasizes the importance of understanding cognitive bias in decision-making and its effect on professional outcomes. The study's results have practical implications for professionals, highlighting the necessity of acknowledging cognitive bias and adopting strategies to mitigate it.