Sunk cost of local elected representatives in situation of fiscal competition: An example of escalating commitment

Abstract Introduction Competition between French local communities to build infrastructures to attract enterprises and residents could sometimes result in irrational public spending. Objectives Show the influence of psychological factors and the phenomenon of escalating commitment in particular on this type of economic decision. Method We conducted a survey comprising four scenarios which were sent to 285 local elected representatives and we study the impact of the factors “Amount of sunk costs” and “Level of project completion” on two dependent variables, “the desire to complete the project” and “the judgment regarding the quality of the investment”. The scenarios presented a project which…