Austin's laptop has been having problems. He has doubled the memory and replaced the battery. These expensive repairs have improved the computer's performance but something is still wrong. Austin's girlfriend advises him to cut his losses and get a new computer. Prospect theory would predict that Austin will:
A) keep the laptop until it dies, but buy a new one as well
B) keep the laptop until it dies, but stop doing repairs
C) sell the laptop to get back his repair costs
D) repair the laptop because he has already done these repairs

Question

Quizplus · Accepted Answer

Prospect theory suggests that people are more likely to continue investing in a losing proposition due to the sunk cost fallacy, where they feel compelled to justify past investments.

Austin's Laptop Has Been Having Problems