Paper that the link is reporting on: Hafenbrack, Kinias, and Barsade (2013)
Abstract:
In the research reported here, we investigated the debiasing effect of mindfulness meditation on the sunk-cost bias. We conducted four studies (one correlational and three experimental); the results suggest that increased mindfulness reduces the tendency to allow unrecoverable prior costs to influence current decisions. Study 1 served as an initial correlational demonstration of the positive relationship between trait mindfulness and resistance to the sunk-cost bias. Studies 2a and 2b were laboratory experiments examining the effect of a mindfulness-meditation induction on increased resistance to the sunk-cost bias. In Study 3, we examined the mediating mechanisms of temporal focus and negative affect, and we found that the sunk-cost bias was attenuated by drawing one’s temporal focus away from the future and past and by reducing state negative affect, both of which were accomplished through mindfulness meditation.
Unfortunately, I think they botched the decision tasks from Arkes and Blumer (1985) in studies 2a and 2b. In each study, prior to the decision task, participants in the experimental group listened to a mindfulness-meditation recording whereas those in the control group listened to a neutral recording.
In study 2a:
Participants were asked to play the role of the owner of a printing company who had recently spent $200,000 to buy a new printing press. One week later, a competitor went bankrupt and offered to sell, for $10,000, his computerized printing press, which worked 50% faster than the new $200,000 printing press at about half the production cost. Because the new $200,000 printing press was custom-made for the firm’s needs, it could not be sold to raise money to purchase the competitor’s press. However, participants were informed that they had $10,000 in savings that could be used to buy it. They were then asked to decide whether to buy the competitor’s press. A decision to buy it was taken to indicate that the participant had resisted the sunk-cost bias.
In study 2b:
[P]articipants were asked to play the role of the president of an aviation company that had committed $10 million to developing a radar-blank plane, “a plane that could not be detected by conventional radar.” After $9 million had been spent, a rival company announced the debut of their own radar-blank plane, which had better performance and lower cost. Participants were then asked to decide whether to invest the remaining $1 million in continued development of the company’s inferior plane. A decision to continue to fund the inferior plane was taken as an indication of having succumbed to the sunk-cost bias.
I was initially confused over why the authors think that these studies isolate the sunk-cost bias, as we can easily come up with alternative explanations for preferring one decision over the other (e.g., in 2a: high diminishing returns from additional printing presses and nonlinearity of the utility of savings; in 2b: whether it is worthwhile to invest the $1 million depends on future demand and supply, and withdrawing from R&D at this point may incur large losses in reputation and morale). Since there are alternative explanations, it is plausible that mindfulness-meditation may be moderating some other cognitive or emotional mechanism (independent of the sunk-cost bias) that changes the participants' propensity to choose one decision over the other. My confusion was resolved after I consulted the reference to Arkes and Blumer. It turns out that Hafenbrack et al. had (unknowingly?) neglected to include the design in Arkes and Blumer's studies that isolates the sunk-cost bias. In particular, Arkes and Blumer performed two versions of each experiment with the sunk cost being manipulated.
In fact, Arkes and Blumer explicitly noted this, so Hafenbrack et al. should have known (emphasis mine):
Experiments 1 and 2 [not used by Hafenbrack et al.] are relatively pure examples [of the sunk cost effect] in that other explanations of the results are not readily available. Many of the following studies [Hafenbrack et al. used two of these designs] are less pure. They involve much more complex economic decisions than are required in the first two experiments. As a result of using more complex stories, we are creating a stimulus situation in which some explanations of the data other than the sunk cost effect may exist. It is virtually impossible to rule out every alternate explanation in every such story. However, the consistent pattern of results found in all of the stories plus the demonstration of the sunk cost effect in the purer stories lead us to feel confident in our explanation of the data.
The next three experiments differ from the prior two in that pairs of scenarios are presented in each experiment. One member of each pair is as similar to the other member in as many financial aspects as possible. They differ, however, in that only one member of each pair has a sunk cost. In this way we can assess the impact of the sunk cost component of the scenario.
Hafenbrack et al. should have used a full 2x2 design manipulating the sunk cost in the decision and the presence of mindfulness-meditation induction. In addition, I think it would be more appropriate to use experiments from Arkes and Blumer that have more ecological validity for Hafenbrack et al.'s participants, who were recruited from Mechanical Turk—it is unlikely that these participants had made high-level corporate decisions in the past.
For reference, how Arkes and Blumer isolated the sunk-cost effect is also how you construct the Allais paradox—you cannot determine how the participants messed up because you don't know their utility functions, but you can determine that they messed up if they have consistent utility functions.
(Despite my criticisms of studies 2a and 2b, I think the paper is well written and the models and bootstrap tests in study 3 are nice touches.)
So that the sunk cost bias is part of an adaptive strategy where past investment strengthens the likelihood of future investment, and thereby sticking with a project til the end. It helps keep you on course, for better and worse.
Some bias' are better than others. In this example, a bias to avoid sunk costs is judged better than a bias to accept / seek out sunk costs. Just as I judge a bias to be or seek the awesome is better than a bias to accept or seek tedium. If "bias" is equated to "disapproved" only, then all sorts of positive outcomes can go unrealized. A bias toward rationality, toward finding people who can offer strong arguments against my arguments, a bias towards beauty, all are delightful bias'.
This is interesting. Apparently, meditating for 15 minutes can reduce susceptibility to the sunk cost bias.
Across two separate experiments, the researchers tested this by giving one group of participants a 15-minute mindfulness meditation induction.Then they were given a business scenario which was designed to test the sunk cost bias.
In comparison to a control condition, thinking mindfully doubled the number of people who could avoid the sunk cost bias.
In the control condition just over 40% of people were able to resist the bias. This shot up to almost 80% among those who were thinking mindfully.
The researchers achieved similar results in another experiment and then went on to examine exactly how mindfulness is helpful.
In a third experiment they found that mindfulness increases the focus on the present moment, as it should.
A focus on the present in turn reduced negative feelings participants had about the ‘sunk cost’–the time, money and effort that had gone to waste.
This reduction in negative emotion meant participants were much better equipped to resist the bias.
Ironically, I did a search on Less Wrong to see if something like this had been posted before and came across this comment:
Good points. The lack of scientific research discussed is certainly an issue. I did a quick literature sweep before writing this post, but decided not to include that information here.
One is a sunk cost fallacy. If you have sunk ten days into it you are less willing to ditch it because fallible humans are often unable to act like good economists and recognize that sunk costs are irrelevant.At the dhamma.org courses I haven't found that to be the case. The management at the Massachusetts center informed me that a large majority of students never return to take a second course. Perhaps the cost needs to be larger; people may find it difficult to give up the practice (when they have good reason to) if they have done it daily for some length of time.
According to that anecdote, a large majority of students never take a second course in meditation. It might be due to the study above, where meditating itself makes people less likely to engage in sunk cost thinking.