Sunk costs lead to higher quality and lower prices for consumers.
Sunk cost bias can sometimes lead to better decisions, especially for consumers with self-control issues. The study shows that having sunk costs can motivate people to put in more effort. For businesses, setting higher prices can actually improve the perceived quality of their products. This can result in higher profits, lower prices, and increased overall welfare. So, pricing strategies like 0% financing, often seen as exploitative, can actually benefit both consumers and businesses in the long run.