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  • Hailey DiCicco
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Hailey DiCicco

Sunk or Dunk?: An Empirical Analysis of the Effect of Sunk Cost Fallacy in Professional Basketball

Project Description

This project is divided into two sections. The first section is a comparison between the NBA and WNBA, using performance metrics from game statistics. Using performance characteristics, an empirical analysis was used to determine if the number of minutes played was determined by consistent parameters across these organizations. This finding showed inconsistency. The WNBA showed higher valuation for blocks, steals, and assists while the NBA showed higher valuation for three-point percentages and defensive rebounds.

The second section of the paper evaluates the sunk cost fallacy and its impacts in the NBA. The WNBA was not able to be included in this part of the study due to a lack of salary data. The sunk cost fallacy is described as: as the spending for a person or thing increases, the perceived need to get the most out of that financial decision increases. It was found that a 1% increase in salary statistically increases minutes played by 1.5 minutes. This reveals that the sunk cost fallacy could be at play in the NBA, however, more investigation is needed to make more firm conclusions.

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Department

Business and Economics

Faculty Advisor

Jennifer VanGilder