Payment Depreciation

What it is

Gourville and Soman predicted that when a cost comes before a benefit, the sunk-cost pull of the payment on enjoyment of the later benefit weakens over time, and found evidence of it across several experiments. It is drawn from work by John Gourville and Dilip Soman (1998).

In effect

In the article on paying for gyms, a fee has most weight in the days after it is paid, and a renewing contract keeps running after it has faded.

What it does not say

The prediction is that the pull of a payment weakens with time. It does not say that every prepaid purchase goes unused, and the evidence comes from experiments across several kinds of transaction.

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