Daniel Friedman
Daniel Friedman is an experimental economist at the University of California, Santa Cruz, and the first author of the 2007 paper that built a laboratory treasure-digging game specifically to isolate the sunk cost effect. The team varied eleven different features of the task and found what they themselves called a surprisingly small effect, largely unmoved by the psychological explanations that had been proposed for it.
Who they are
The design is the point. Most sunk cost evidence comes from questionnaires, where people say what they would do in a described situation. Here people played a game with real money at stake, digging for treasure and deciding whether to keep going, with the amount already spent varied deliberately. When the incentives became real, the effect shrank.
Key papers
Friedman, D., Pommerenke, K., Lukose, R., Milam, G., & Huberman, B. (2007). "Searching for the sunk cost fallacy", Experimental Economics, 10(1), 79 to 104. First author. Eleven treatment factors varied; the effect was small and largely insensitive to the proposed psychological drivers.
Key ideas
His result is one of two reasons the sunk cost fallacy is graded mixed on this site rather than robust. The effect survives the questionnaire and shrinks when real incentives are attached. The other reason is George Beknazar-Yuzbashev and colleagues' field experiment, carried at Sunk Cost Fallacy.
Two sides. In favour of the effect: it is easy to produce, it appears across many scenarios, and it pools well in the questionnaire literature. Against: the harder the test, the smaller it gets. Where this site lands is that the effect is real, small, and does not port cleanly from a described dilemma to a real decision.
Small is not nothing. His paper reports a diminished effect, not an absent one, and it is not evidence that the fallacy is a myth.
Concepts on this site
Sunk Cost Fallacy, and specifically the half of its record that thins out
Prospect Theory, the decision-theoretic frame the effect is usually placed in
Waste Aversion, one of the psychological drivers his design tested against
Sources
- Friedman, D., and colleagues (2007). Experimental Economics, 10(1), 79 to 104. Abstract only.
- Vault record, 2026-09-11, for Why You Finish the Series You Stopped Enjoying.