Sunk costs under stress: Acute stress reduces the impact of past expenses on risky decisions

Rational choice should be guided solely by the prospects of available options. However, our decisions are often influenced by irrecoverable past costs, even when the current course of action turns out to be unfavorable, reflecting a cognitive bias known as the "sunk-cost effect". In everyday life, many decisions are made under stress or elicit stress themselves. Whether and how stress impacts the sunk-cost effect, however, is not known. Based on evidence suggesting that the sunk-cost effect critically depends on the dorsolateral prefrontal cortex, which in turn is highly sensitive to stress, we hypothesized that stress may reduce the influence of past expenses on current decisions. Participants underwent a psychosocial stress manipulation or control procedure, before we assessed their sunk-cost tendency in a monetary investment task. Overall, participants showed a pronounced sunk-cost effect, particularly for options with low expected value. Acute stress reduced this tendency to invest in risky options with low probability of success following high prior investments. Moreover, the strength of this reduction of the sunk-cost effect was predicted by individual cortisol reactivity. These findings show that acute stress may reduce the impact of past expenses on current choice and that this effect may be mediated by glucocorticoid action.