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Discussion Paper Details

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Title: Tuition fees as a commitment device

Author(s): Nadine Ketel, Jona Linde, Hessel Oosterbeek and Bas van der Klaauw

Publication Date: March 2014

Keyword(s): Field experiment, Higher education and Sunk-cost effect

Programme Area(s): Labour Economics

Abstract: 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.

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Bibliographic Reference

Ketel, N, Linde, J, Oosterbeek, H and van der Klaauw, B. 2014. 'Tuition fees as a commitment device'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9862