5/30/2023 0 Comments Time sink cost fallaceyIf I go to a restaurant and become full after eating most of my food, I feel compelled to eat the rest so that it isn’t “wasted.” The pressure to eat also comes from the awareness that nobody else will eat that food after me, and it’ll be just thrown out. Here are a few instances where you are vulnerable to falling for sunk cost fallacy. If you take a moment, you can probably think of all sorts of situations where you make irrational decisions because of the sunk cost fallacy. ![]() ![]() Now that you are familiar with the definition of sunk cost fallacy, here are some common traps we may have fallen for. Evaluate the Worth of An Event/Action Versus Its Outcomes Overcome The Fear of Letting Your Efforts Go to Waste Here are some of the most common sunk cost fallacies we come across and tips on not letting them affect our decisions. Even though you are sick, you decide to go to the concert because otherwise, “your money will go to waste.” On the day of the event, you catch a cold. Or, let’s say you buy tickets to a concert. This money is now gone and cannot be recovered, so it shouldn’t figure into the business’s decision-making process. For example, a business that invested a million dollars into new hardware. In economics, a sunk cost is any past cost that has already been paid and cannot be recovered. Sunk cost fallacy is a phenomenon where a person is reluctant to abandon or let go of a course of action because of the monetary, physical, or emotional investment done, despite knowing that continuing the course of action is bringing more damage than good. Do you think you make smart, rational decisions most of the time? Chances that even if you do make rational decisions, you still occasionally fall for the sunk cost fallacy.
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