In the context of loss aversion, identify a true statement about the sunk cost fallacy.

Question

Multiple Choice
People ascribe greater value to things they already own than to objects owned by someone else.
People are reluctant to give up on a venture because of past investment.
People disregard prior experiences or failures when making predictions about the possibility of an outcome.
People tend to report falsely, after the fact, that they accurately predicted an outcome.

Answer 1

The true statement about the sunk cost fallacy in the context of loss aversion is:

People are reluctant to give up on a venture because of past investment.

This reflects the tendency of individuals to continue a project or endeavor due to the resources (time, money, effort) they have already invested, rather than evaluating the current and future benefits.