Do the sunk cost effect and cognitive dissonance increase risk perception? An empirical study in the context of city smog

Abstract

City smog is an increasingly severe environmental hazard in China. People are eager for ways to protect themselves from city smog. By utilizing two laboratory experiments based on real context of city smog, this paper investigates the impacts of sunk cost and cognitive dissonance on individuals’ risk perception of city smog. In Experiment 1, the results show that the risk perception of individuals with a sunk cost is significantly higher than those without. Moreover, cognitive dissonance has a significant influence on risk perception. In Experiment 2, the results suggest that: (1) the risk perception of a consumer with a prevention focus is significantly greater than that of those with a promotion focus; (2) the risk perception of a prevention-oriented consumer with no sunk cost is similar to that of a promotion-oriented consumer with sunk cost. The study concludes with policy implications.