The Foreign Language Effect on The Sunk-Cost Fallacy with English-Chinese Bilinguals Shiny Choi

Introduction

The Foreign Language Effect People tend to make more rational decisions When they reason in a foreign language than in a native language

The Framing Effect!! Half-full?? Half-Empty??

Asian Disease Problem Gain Expected Values Recently, a dangerous new disease has been going around. Without medicine, exactly 600,000 people will die from it. In order to save these people, two types of medicine are being made. If you choose Medicine A, exactly 200,000 people will be saved. If you choose Medicine B, there is a 33.3% chance that exactly 600,000 people will be saved and a 66.6% chance that no one will be saved. Which medicine would you choose? A? B? Expected Values Medicine A = 100% X 200,000 = 200,000 Medicine B = 33.3% X 600,000 + 66.6% X 0 = 200,000

Asian Disease Problem Loss Expected Values Recently, a dangerous new disease has been going around. Without medicine, 600,000 people will die from it. In order to save these people, two types of medicine are being made. If you choose Medicine A, exactly 400,000 people will die. If you choose Medicine B, there is a 33.3% chance that no one will die and a 66.6% chance that exactly 600,000 people will die. Which medicine do you choose? A? B? Expected Values Medicine A = 100% X 400,000 = 400,000 Medicine B = 33.3% X 0 + 66.6% X 600,000 = 400,000

Why? gain loss >

Keyser, Hayakawa & An (2012)

The Sunk-Cost Fallacy A Sunk Cost : a cost that has already been paid and cannot be recovered Sunk Cost Bias/Effect/Fallacy : People find it hard to abandon their past investment and Continue investing although the past investment does not influence on the future outcome

The Sunk-Cost Scenario Invest No-Invest As the president of an airline company, you have invested 10 million dollars of the company’s money into a research project. The purpose was to build a plane that would not be detected by conventional radar, in other words, a radar-blank plane. When the project is 90% completed, another firm begins marketing a plane that cannot be detected by radar. Also, it is apparent that their plane is much faster and far more economical than the plane your company is building. The question is: should you invest the last 10% of the research funds to finish your radar-blank plane? Yes No As president of an airline company, you have received a suggestion from one of your employees. The suggestion is to use the last 1 million dollars of your research funds to develop a plane that would not be detected by conventional radar, in other words, a radar-blank plane. However, another firm has just begun marketing a plane that cannot be detected by radar. Also, it is apparent that their plane is much faster and far more economical than the plane your company could build. The question is: should you invest the last million dollars of your research funds to build the radar-blank plane proposed by your employee? Yes No

Hypothesis 1: When using a second language, participants will be less affected by the framing effect (Gain Vs. Loss) than when they use their native language, and show a more even distribution of decisions. Hypothesis 2: When using a second language, participants will be less affected by the sunk cost effect (Investment Vs. No Investment) than when they use their native language, and show a more even distribution of decisions.

Method

Participants 82 native-Chinese speakers were recruited from Carleton College and St. Olaf College 52 from Carleton (36 women, 16 men) 30 from St. Olaf (18 women, 12 men) 2 participants were excluded Average score for English fluency level was 7.5 (1-10) Received $2 per person as compensation Experiment took approx. 15 min

Back to Back Translation English → Chinese → English

Set 1 Set 2 Set 3 Set 4 Set 5 Set 6 Set 7 Set 8 10 participants 5 female 5 male English Gain version Invest version Set 2 4 female 6 male Loss version No-invest version Set 3 6 female 4 male Set 4 7 female 3 male Set 5 Chinese Set 6 8 female 2 male Set 7 Set 8 Table 1. The composition of each handout

Results & Discussion

Hypothesis 1 The foreign language effect was successfully replicated in the present study: The framing effect was reduced when the problem was presented in the foreign language, which is consistent with the conclusion reached by Keysar et al. (2012)

Hypothesis 2 No significant difference was found between the decisions made in the native language and the foreign language; People wanted to continue their investment on top of the past investment. The foreign language effect was not present

Conclusions & Future study

Conclusions Future Study The present study supports the theory that using a foreign language reduces the cognitive bias coming from the framing effect during decision-making processes The present experiment did not find that the foreign language effect helps people to be less influenced by their past investment, sunk costs, when making decisions More research on the foreign language effect on the sunk cost bias With different languages With different scenarios Because only once done More quantity needed to be valid

Thank You!!