Inventor Perseverance after Being Told to Quit: The Role of Cognitive Biases

T. B. ASTEBRO, S.A. Jeffrey, G. Adomdza

Journal of Behavioral Decision Making

July 2007, vol. 20, n°3, pp.253-272

Departments: Economics & Decision Sciences, GREGHEC (CNRS)

Keywords: Inventor behavior, Sunk-cost bias, Optimism, Overconfidence, Decision biases

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.