Wednesday, October 22, 2014

Sunk Cost Fallacy

Our good friend David McRaney writes:

The sunk cost fallacy.

The misconception: You make rational decisions based on the future value of objects, investments, & experiences.

The truth: Your decisions are tainted by the emotional investments you accumulate, & the more you invest in something, the harder it becomes to abandon it.

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When you lose something permanently it hurts. The drive to mitigate this emotion leads to strange behaviors. Have you ever gone to see a movie only to realize within fifteen minutes or so that you are watching one of the worst films ever made, but you sit thru it anyway? You don't want to waste the money so you sit back in your chair & suffer. (Battlefield: Earth, for instance, Chariots of Fire) 

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What about that time you made it back home with a bag of burritos, & after the first bite you suspected they might have been filled with salsa-infused dog food, but you ate them anyway, not wanting to waste either money or food? If you've experienced a version of any of these, you've fallen victim to the sunk cost fallacy.

Sunk costs are payments or investments that can never be recovered. An android with fully functioning logic circuits would never make a decision that took sunk costs into account, but you would. As am emotional human, your aversion to loss often leads you right into the sunk cost fallacy. A confirmed loss lingers & grows in your mind, becoming larger in your history than it was when you first felt it. 

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So let's be like androids.

























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