Premium
Inventor perseverance after being told to quit: the role of cognitive biases
Author(s) -
Åstebro Thomas,
Jeffrey Scott A.,
Adomdza Gordon K.
Publication year - 2007
Publication title -
journal of behavioral decision making
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.136
H-Index - 76
eISSN - 1099-0771
pISSN - 0894-3257
DOI - 10.1002/bdm.554
Subject(s) - overconfidence effect , optimism , pessimism , procrastination , sunk costs , regret , psychology , cognitive bias , social psychology , optimism bias , economics , population , cognition , microeconomics , sociology , demography , philosophy , epistemology , machine learning , neuroscience , computer science
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. Copyright © 2007 John Wiley & Sons, Ltd.