Research on the Impact of Sunk Cost on Chinese Households

Abstract

In real life, the impact of sunk cost fallacy on people is hard to be ignored. It is of practical significance for people to find out these impacts and find ways to improve them. This paper first describes the research background and motivation. By citing examples, it is proved that the existence of sunk costs has seriously affected our life decisions and also had a direct impact on Chinese households. Therefore, it is of practical significance to study how to minimize the sunk cost fallacy and the actual impact of the sunk cost fallacy on the family. Secondly, the definition, causes and avoidance methods of sunk cost fallacy are described in detail. Thirdly, it discusses the impact of sunk cost fallacy on Chinese families. Three main influences are listed through reading literature and induction. First, the phenomenon of high bride price in remote and backward areas. Second, mothers tend to take more responsibility for taking care of their children. Third, the mother will endure an unhappy marriage for a long time because her child does not grow up in a single-parent family. And give corresponding suggestions for the three bad effects listed. Basically, it is to improve laws and regulations, strengthen men's sense of responsibility, and stop losses in time. Finally, it is concluded that the misunderstanding of sunk costs has mainly caused three bad effects on Chinese families.