Neural mechanisms and personality correlates of the sunk cost effect

Abstract

The sunk cost effect, an interesting and well-known maladaptive behavior, is pervasive in real life, and thus has been studied in various disciplines, including economics, psychology, organizational behavior, politics, and biology. However, the neural mechanisms underlying the sunk cost effect have not been clearly established, nor have their association with differences in individual susceptibility to the effect. Using functional magnetic resonance imaging, we investigated neural responses induced by sunk costs along with measures of core human personality. We found that individuals who tend to adhere to social rules and regulations (who are high in measured agreeableness and conscientiousness) are more susceptible to the sunk cost effect. Furthermore, this behavioral observation was strongly mediated by insula activity during sunk cost decision-making. Tight coupling between the insula and lateral prefrontal cortex was also observed during decision-making under sunk costs. Our findings reveal how individual differences can affect decision-making under sunk costs, thereby contributing to a better understanding of the psychological and neural mechanisms of the sunk cost effect.