Sunk Costs Influence Capital Budgeting Decisions When the Sunk Costs

question 115

True/False

Sunk costs influence capital budgeting decisions when the sunk costs exceed future cash inflows.

---

Definitions:

Self-awareness

An understanding of one's personal attributes, feelings, intentions, and aspirations.

Deindividuation

Deindividuation is a psychological state occurring in group settings that leads to a reduction in self-awareness and an increase in impulsivity and deviation from typical behavior, often resulting in actions not typically exhibited alone.

Self-discrepancy Theory

Higgins’s theory about the consequences of making actual – ideal and actual – ‘ought’ self-comparisons that reveal self-discrepancies.

Festinger

Leon Festinger was a psychologist known for the theory of cognitive dissonance, which describes the discomfort felt when holding conflicting thoughts or beliefs.