Regarding the sunk cost effects, previous research has unveiled a preposterous behavior where people seemingly have limited rationality. Researchers have tried to find an appropriate interpretation for such contradictory phenomenon. The purpose of this study is to interpret such contradiction by exploring how people suffer sunk cost fallacies and the influence of cognitive dissonance. The study conducts an experimental survey on managers of firms listed in Taiwan Stock Exchange (TSE) and Over-The-Counter (OTC). The results showed that cognitive dissonance does not mediate the relationship between sunk costs and willingness of continuity; however, cognitive dissonance plays a moderating role and when its magnitude is high, the sunk costs has increasing impacts on willingness of continuity. The results demonstrate that cognitive dissonance is independent to both sunk cost and willingness of continuity providing another perspective for exploring the theory of sunk cost effects. Finally, suggestions for management and future research are provided.
