# The Low Down on the Sunk Cost Fallacy Martin, J. (2019) ’The low down on the sunk cost fallacy – Espresso Science’, Available at: https://espressoscience.com/2019/08/28/the-low-down-on-the-sunk-cost-fallacy/ ## Notes - concorde fallacy - any decision going forward should not be based on what has happened in the past - pride prevents us from giving up on something - negative feelings about our sunk costs drive the behaviour - knowing why can help make decisions to quit - not doing something is an action in itself - learning how to let go %% ## Highlights ### [[Concorde Fallacy|concorde fallacy]] > The sunk cost fallacy is when we continue with an endeavour even though it makes us unhappy or worse off because of the time, money, and effort – i.e. the ‘sunk costs’ – we’ve already invested in it. ([View Highlight](https://read.readwise.io/read/01gm8msb75ggt50yp5fx4jcgtb)) ^y5c0l ### [[pride prevents us from giving up on something]] > One is simply that we don’t like to be wrong. There’s a [mental disconnect](https://psycnet.apa.org/record/1993-97948-000) between the effort we put in and the lower than expected return on our investment. As a result, we exaggerate the benefits to justify the cost. ([View Highlight](https://read.readwise.io/read/01gm8mvwq1hcq7rqa9e52ya9t2)) ^-txtz > We also want to convince ourselves and others that [we’re not wasteful](https://onlinelibrary-wiley-com.ezp.lib.unimelb.edu.au/doi/10.1002/%28SICI%291099-0771%28199609%299%3A3%3C213%3A%3AAID-BDM230%3E3.0.CO%3B2-1) or ‘quitters’. ([View Highlight](https://read.readwise.io/read/01gm8mvyvweqcr752yskcdqzg5)) ^sppva ### [[negative feelings about our sunk costs drive the behaviour]] > We still go ahead with the sinking ship despite feeling bad about it. One study goes so far as to say that the [negative feelings we have about our sunk costs actually drives the behaviour](https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0209900). The researchers found the likelihood of people sticking to their guns was predicted by how bad they felt immediately after making a decision about sunk costs. ([View Highlight](https://read.readwise.io/read/01gm8mwcr0mtv721n9mc23effp)) ^p288- > We may also [fear the regret](https://psycnet.apa.org/doiLanding?doi=10.1037%2F0021-9010.92.2.545) we might feel by withdrawing our commitment. ([View Highlight](https://read.readwise.io/read/01gm8mwf5ej3416y1ctpmf4crc)) ^zg7hs ### [[any decision going forward should not be based on what has happened in the past]] > Economic theory suggests that [“…decisions should only be guided by future gains and losses, as prior costs do not affect the objective outcomes of current decisions.”](https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0209900) ([View Highlight](https://read.readwise.io/read/01gm8mza6fwy4ypnexfsxqrvfc)) ^7xfi7 ### [[knowing why can help make decisions to quit]] > People who [justify their decisions feel less bad](https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0209900) about poor investments and are less susceptible to the sunk cost fallacy than people who don’t justify them. ([View Highlight](https://read.readwise.io/read/01gm8mzsyg5b19yf3w6a850gjn)) ^1v8av ### [[not doing something is an action in itself]] > When things go wrong, Western society has a [tendency towards action](https://journals-sagepub-com.ezp.lib.unimelb.edu.au/doi/full/10.1177/1948550612468774) – to do something rather than not. In fact, we have a tendency to [commit even more resources](https://www-sciencedirect-com.ezp.lib.unimelb.edu.au/science/article/pii/0749597885900494) the more desperate the situation is. ([View Highlight](https://read.readwise.io/read/01gm8n17svzq3wrzt3yc3snpsw)) > But researchers found we can prevent this by [reframing how we think](https://journals-sagepub-com.ezp.lib.unimelb.edu.au/doi/full/10.1177/0956797617739368?url_ver=Z39.88-2003&rfr_id=ori%3Arid%3Acrossref.org&rfr_dat=cr_pub%3Dpubmed). We are less likely to commit more resources to a failing venture if we are taught to think of committing more resources as ‘inaction’ and not choosing to commit is an ‘action’ of itself. ([View Highlight](https://read.readwise.io/read/01gm8n2dqka6p298k058cbepx9)) ^pn--x