The Sunk Cost Fallacy:
Evidence from the National
Basketball Association
Kristen LaPlante
December 1, 2009
Why do we care about
sunk costs?
Does a higher salary lead to more
playing time in the NBA?
Previous literature focused on draft number:
•
Staw & Hoang (1995) find higher draft number reduces playing
time by as much as 23 minutes in year 2, with effect decreasing
over time and significant through year 5
•
Camerer & Weber (1999) use more controls and alternative
explanations, finding that an escalation effect persists only
through year 3 and to a lesser degree
Summary Statistics
Table 1. Summary Statistics
Minutes Played
Games Started
Draft Number
Current Salary*
Past Salary*
Future Salary* #
Performance Measures
Points**
Rebounds**
Assists**
Steals**
Blocks**
Personal Fouls**
Turnovers**
Field Goal Percentage
Free Throw Percentage
Three Point Percentage
Coach's Experience
Frontcourt
Injured
* in millions
# 2001 and later
** per 36 minutes
Whole Sample
(n=2333)
1551.87 (936.78)
33.83 (30.83)
20.26 (14.73)
4.10 (4.10)
6.07 (13.22)
11.91 (16.94)
Past Salary
=0
>0
1213.23 (877.01)
1778.77 (906.86)
23.73 (27.53)
40.60 (31.07)
22.56 (15.11)
18.72 (14.28)
2.73 (3.13)
5.02 (4.41)
0 (0)
10.14 (15.84)
8.34 (13.10)
13.83 (18.41)`
Salary
< $5m
≥ $5m
1328.83 (881.91)
2058.64 (857.52)
26.15 (28.51)
51.29 (28.73)
22.92 (14.92)
14.21 (12.33)
1.85 (1.27)
9.20 (3.73)
1.76 (3.31)
15.85 (20.24)
3.83 (6.23)
24.75 (20.33)
13.75 (4.47)
6.57 (2.83)
2.78 (1.97)
1.12 (0.525)
0.852 (0.831)
3.77 (1.57)
12.64 (3.84)
6.39 (2.83)
2.66 (1.98)
1.16 (0.60)
0.810 (0.821)
4.09 (1.72)
14.49 (4.71)
6.69 (2.82)
2.86 (1.96)
1.09 (0.463)
0.881 (0.838)
3.56 (1.41)
12.82 (3.93)
6.44 (2.79)
0.840 (0.817)
2.64 (1.91)
1.14 (0.554)
4.02 (1.59)
15.84 (4.90)
6.86 (2.88)
0.880 (0.862)
3.11 (2.07)
1.07 (0.451)
3.22 (1.35)
2.16 (0.931)
0.445 (0.075)
0.723 (0.128)
26.73 (16.76)
8.41 (7.36)
0.616 (0.486)
0.240 (0.427)
2.18 (0.924)
0.433 (0.086)
0.707 (0.138)
26.10 (17.56)
8.24 (7.55)
0.598 (0.491)
0.307 (0.462)
2.15 (0.935)
0.452 (0.067)
0.733 (0.120)
27.12 (16.24)
8.52 (7.23)
0.628 (0.483)
0.209 (0.407)
2.14 (1.02)
43.77 (7.90)
71.21 (13.17)
26.08 (16.98)
8.00 (7.05)
0.606 (0.489)
0.245 (0.430)
2.20 (0.700)
46.02 (6.39)
74.71 (16.22)
28.12 (16.22)
9.32 (7.95)
0.640 (0.480)
0.229 (0.420)
Table 2. Minutes Played Model with Performance Variables and Differing Sunk Cost Measures
Dependent variable= Total minutes played
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Points
63.77*** 57.05*** 62.19*** 45.31*** 52.49*** 47.89*** 47.84*** 47.80***
(15.08)
(13.25)
(14.14)
(9.81)
(11.80)
(10.67)
(10.67)
(10.66)
Rebounds
39.30*** 34.34*** 37.20*** 33.59*** 27.76**
24.71**
24.46**
24.61**
(4.48)
(3.94)
(4.17)
(3.55)
(3.16)
(2.83)
(2.80)
(2.82)
Blocks
48.25
24.99
45.22
22.26
33.32
14.83
14.85
14.26
(1.87)
(0.97)
(1.74)
(0.80)
(1.30)
(0.58)
(0.58)
(0.56)
Assists
85.01*** 74.56*** 82.38*** 67.28*** 67.10*** 59.99*** 60.56*** 60.88***
(8.02)
(7.04)
(7.64)
(5.87)
(6.25)
(5.60)
(5.65)
(5.68)
Steals
-4.53
19.47
-1.98
70.8
18.13
36.44
38.83
36.35
(-0.14)
(0.61)
(-0.06)
(1.93)
(0.57)
(1.15)
(1.23)
(1.15)
Fouls
-300.98*** -288.34*** -298.95*** -295.07*** -281.45*** -272.62*** -271.96*** -272.16***
(-20.34) (-19.54) (-20.09) (-17.88) (-18.98) (-18.44) (-18.40) (-18.42)
Turnovers
-125.03*** -126.94*** -121.68*** -76.39** -104.32*** -108.18*** -109.98*** -109.47***
(-5.27)
(-5.41)
(-5.10)
(-2.83)
(-4.43)
(-4.63)
(-4.71)
(-4.69)
FG%
25.19*** 25.46*** 25.46*** 30.07*** 25.71*** 25.89*** 26.33*** 26.35***
(9.24)
(9.45)
(9.31)
(9.65)
(9.57)
(9.72)
(9.85)
(9.86)
FT%
3.15*
3.66*
3.12*
3.61*
3.13*
3.58*
3.54*
3.59*
(2.15)
(2.53)
(2.13)
(2.28)
(2.18)
(2.50)
(2.48)
(2.51)
3P%
0.17
0.29
0.16
0.54
0.1
0.21
0.27
0.3
(0.18)
(0.31)
(0.17)
(0.52)
(0.11)
(0.23)
(0.30)
(0.32)
Injured
-700.20*** -707.09*** -700.51*** -738.81*** -717.32*** -721.44*** -719.65*** -719.12***
(-20.79) (-21.24) (-20.80) (-20.84) (-21.57) (-21.88) (-21.83) (-21.81)
Frontcourt
151.31*** 134.19** 150.02*** 104.76* 132.60** 119.81** 119.60** 120.83**
(3.67)
(3.28)
(3.63)
(2.44)
(3.25)
(2.96)
(2.96)
(2.99)
Draft Number
-6.57***
-5.67*** -5.59*** -5.55***
(-6.46)
(-5.59)
(-5.51)
(-5.48)
Past Earnings
1.34
(1.31)
Future Contract Value#
5.36***
(6.13)
Salary
26.69*** 23.85*** 24.38*** 19.16***
(7.21)
(6.44)
(6.56)
(3.59)
Coach Experience
-3.17
-6.10*
(-1.75)
(-2.17)
Coach*Salary
0.57
(1.36)
Constant
307.73 503.98** 318.24
200.79
337.47 503.76** 507.24** 527.21**
(1.68)
(2.74)
(1.73)
(1.00)
(1.86)
(2.77)
(2.79)
(2.89)
Adj. R-squared 0.6239
0.6327
0.6329
0.6433
0.6349
0.6414
0.6418
0.6420
***p<.001, **p<.01, *p<..05, one tailed tests
t-values are in parentheses
# subset of sample, only 2001 and later
Table 2. Minutes Played Model with Performance Variables and Differing Sunk Cost Measures
Dependent variable= Total minutes played
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Draft Number
-6.57***
-5.67*** -5.59*** -5.55***
(-6.46)
(-5.59)
(-5.51)
(-5.48)
Past Earnings
1.34
(1.31)
#
Future Contract Value
5.36***
(6.13)
Salary
26.69*** 23.85*** 24.38*** 19.16***
(7.21)
(6.44)
(6.56)
(3.59)
Coach Experience
-3.17
-6.10*
(-1.75)
(-2.17)
Coach*Sal
0.57
(1.36)
Constant
307.73 503.98** 318.24
200.79
337.47 503.76** 507.24** 527.21**
(1.68)
(2.74)
(1.73)
(1.00)
(1.86)
(2.77)
(2.79)
(2.89)
Adj. R-squared 0.6239
0.6327
0.6329
0.6433
0.6349
0.6414
0.6418
0.6420
***p<.001, **p<.01, *p<.05, one tailed tests
t-values are in parentheses
# subset of sample, only 2001 and later
Table 3. Effects on performance variables when sunk costs are accounted for
Dependent variable= Total minutes played
Points
Rebounds
Assists
Fouls
Turnovers
Injured
Frontcourt
No Sunk
Cost
Effects
Draft
Number
Past
Earnings
Future
Salary
Salary
Draft
Number &
Salary
63.77
39.3
85.01
-300.98
-125.03
-700.2
151.31
57.05
34.34
74.56
-288.34
-126.94
-707.09
134.19
62.19
37.2
82.38
-298.94
-121.68
-700.51
150.02
45.31
33.59
67.28
-295.07
-76.39
-738.81
104.76
52.49
27.76
67.1
-281.45
-104.32
-717.32
132.6
47.89
24.71
59.99
-272.62
-108.18
-721.44
119.81
Conclusion
Public appearance seems to be driving force in
playing time decisions
 Teams may internally “rationalize” decisions
as justification for fallacy
 Further research should be done to capture
alternate variables not included in the scope
of this study

The Sunk Cost Fallacy:
Evidence from the National
Basketball Association
Kristen LaPlante
December 1, 2009
Table 2. Minutes Played Model with Performance Variables and Differing Sunk Cost Measures
Dependent variable= Games started
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Points
1.86***
1.63***
1.68***
1.17***
1.32***
1.18***
1.17***
1.17***
(10.34)
(8.85)
(9.04)
(5.70)
(7.02)
(6.16)
(6.15)
(6.15)
Rebounds 1.59***
1.42***
1.36***
1.63***
1.05**
0.95*
0.94*
0.95*
(4.27)
(3.83)
(3.61)
(3.87)
(2.81)
(2.55)
(2.54)
(2.54)
Blocks
3.45**
2.65*
3.12**
2.76*
2.74*
2.15*
2.15*
2.14*
(3.14)
(2.40)
(2.83)
(2.23)
(2.53)
(1.97)
(1.98)
(1.96)
Assists
4.02***
3.66***
3.74***
3.73***
3.17***
2.94***
2.96***
2.96***
(8.93)
(8.10)
(8.17)
(7.31)
(6.98)
(6.46)
(6.48)
(6.49)
Steals
-4.01**
-3.18*
-3.73**
-2.73
-2.93*
-2.34
-2.29
-2.34
(-2.94)
(-2.33)
(-2.74)
(-1.67)
(-2.18)
(-1.74)
(-1.70)
(-1.73)
Fouls
-9.34*** -8.90*** -9.12*** -8.90*** -8.41*** -8.13*** -8.11*** -8.12***
(-14.84) (-14.13) (-14.45) (-12.11) (-13.39) (-12.93) (-12.90) (-12.90)
Turnovers -2.74**
-2.80**
-2.37*
-1.79
-1.75
-1.88
-1.92
-1.91
(-2.71)
(-2.80)
(-2.34)
(-1.49)
(-1.76)
(-1.89)
(-1.93)
(-1.92)
FG%
0.74***
0.75***
0.77***
0.99***
0.76***
0.77***
0.78***
0.78***
(6.35)
(6.48)
(6.61)
(7.10)
(6.69)
(6.77)
(6.83)
(6.83)
FT%
0.04
0.06
0.04
0.06
0.04
0.05
0.05
0.05
(0.64)
(0.93)
(0.58)
(0.82)
(0.64)
(0.87)
(0.86)
(0.87)
3P%
-0.07
-0.06
-0.07
0
-0.07
-0.07
-0.07
-0.07
(-1.68)
(-1.59)
(-1.71)
(0.07)
(-1.80)
(-1.72)
(-1.68)
(-1.67)
Injured
-15.06*** -15.29*** -15.09*** -16.38*** -15.87*** -16.00*** -15.96*** -15.95***
(-10.51) (-10.76) (-10.57) (-10.38) (-11.26) (-11.41) (-11.38) (-11.37)
Frontcourt 6.15***
5.56**
6.01***
4.13*
5.26**
4.85**
4.84**
4.87**
(3.50)
(3.18)
(3.43)
(2.16)
(3.05)
(2.82)
(2.82)
(2.83)
Draft Number
-0.23***
-0.18*** -0.18*** -0.18***
(-5.22)
(-4.22)
(-4.18)
(-4.16)
Past Earnings
0.15***
(3.41)
Future Contract Value#
0.25***
(6.31)
Salary
1.27***
1.18***
1.19***
1.09***
(8.10)
(7.48)
(7.53)
(4.81)
Coach Experience
-0.07
-0.12
(-0.91)
(-1.04)
Coach*Salary
0.01
(0.60)
Constant
-4.63
2.14
-3.47
-14.05
-3.21
2.13
2.21
2.58
(-0.59)
(0.27)
(-0.45)
(-1.57)
(-0.42)
(0.28)
(0.29)
(0.33)
Adj. R-squared
0.4419
0.4504
0.4454
0.4555
0.4625
0.4678
0.4678
0.4675
***p<.001, **p<.01, *p<..05, one tailed tests
t-values are in parentheses
# subset of sample, only 2001 and later