DP9862 Tuition fees as a commitment device
|Author(s):||Nadine Ketel, Jona Linde, Hessel Oosterbeek, Bas van der Klaauw|
|Publication Date:||March 2014|
|Keyword(s):||Field experiment, Higher education, Sunk-cost effect|
|JEL(s):||C93, D03, I22|
|Programme Areas:||Labour Economics|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9862|
This paper reports on a field experiment testing for sunk-cost effects in an education setting. Students signing up for extra-curricular tutorial sessions randomly received a discount on the tuition fee. The sunk-cost effect predicts that students who receive larger discounts will attend fewer tutorial sessions. For the full sample, we find little support for this hypothesis, but we find a significant effect of sunk costs on attendance for the 45% of students in our sample who are categorized as sunk-cost prone based on hypothetical survey questions. For them higher tuition fees can serve as a commitment device to attend classes.