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http://dx.doi.org/10.5394/KINPR.2020.44.4.326

The Effect of Sunk Cost and Anchoring Effect on Shipping Finance  

Kim, Wu-Seok (Graduate School of National Korea Maritime and Ocean University)
Lee, Ki-Hwan (Graduate School of National Korea Maritime and Ocean University)
Publication Information
Journal of Navigation and Port Research / v.44, no.4, 2020 , pp. 326-337 More about this Journal
Abstract
Shipping companies have suffered additional losses because of irrational shipping finance decisions. This paper analyses the cases according to the behavioral finance theories. The theories of behavioral finance used in the analysis and research of this paper are the anchoring effect and sunk cost effect. The backgrounds and reasons for the decisions regarding ship financing are analysed based on the questionnaire responses and case studies. As a result of the analysis, it is found that the behavioral finance theories, anchoring effect, and sunk cost effect, have effects on the ship financing decisions, that errors related to behavioral finance can result in irrational decisions, and that shipping companies suffered additional losses because of the behavioral finance errors.
Keywords
behavioural finance; anchoring effect; sunk cost effect; shipping finance; shipping; decision-making;
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