Emotions before actions: When children see costs as causal

Adults expect people to be biased by sunk costs, but young children do not. We tested between two accounts for why children overlook the sunk cost bias. On one account, children do not see sunk costs as causal. The other account posits that children see sunk costs as causal, but unlike adults, think future actions cannot make up for sunk costs. These accounts make opposing predictions about whether children should see sunk costs as affecting emotions. Across three experiments, 4-7-year-olds (total N = 320) and adults (total N = 429) saw stories about characters who collected items that were easy or difficult to obtain, and predicted characters' emotions and actions. At all ages, participants anticipated that characters would feel sadder about high-cost objects, but only adults predicted that characters would keep high-cost objects. Our findings show that children see incurred costs as causal, and that costs are integrated children's and adults' theory of emotions. Moreover, the findings suggest that developmental differences in sunk cost reasoning may rest in children's incomplete mental accounting. We also discuss children's reasoning about rational and irrational action.