The role of sunk costs in online consumer decision-making

  • Authors:

  • Austin Rong-Da Liang;Chia-Ling Lee;Wei Tung

  • Affiliations:

  • Department of Leisure and Recreation Management, National Kaohsiung University of Hospitality and Tourism, Taiwan, ROC;Department of Accounting and Information Technology, National Chung Cheng University, Taiwan, ROC;Graduate Institute of Marketing and Logistics/Transportation, National Chiayi University, Taiwan, ROC

  • Venue:
  • Electronic Commerce Research and Applications
  • Year:
  • 2014

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Abstract

Sunk costs, which can cause inconsistencies between consumer behavior and economic theory, have been widely studied in different research areas and among various consumer groups. Nevertheless, the authors found that to date there has been no empirical research examining how sunk costs affect consumer behavior with regard to online shopping in different product types. Therefore, this study used the following 2x2x2 experimental design to study the effects of sunk costs on consumers' online shopping decisions. The results show that (1) sunk costs have significant effects on consumer online shopping behavior. However, due to the different product characteristics, the impacts were weaker effective when consumers bought search goods than when they purchased experience goods; (2) the sunk costs (Membership fee vs. Deposit) of an initial choice and a new choice had interaction effects on consumer intention to purchase a new product; and (3) the sunk costs and service quality of an initial choice and new choice would affect the level of regret felt with regard to the consumer's initial choice. In addition, some recommendations on market positioning and service quality design are made, which practitioners can refer to when formulating marketing strategies.