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In other words, people should not let sunk costs influence their decisions; sunk costs are irrelevant to rational decisions. Thus, if a new factory was originally projected to cost $100 million, and yield $120 million in value, and after $30 million is spent on it the value projection falls to $65 million, the company should abandon the project ...
[73] (see also Sunk cost fallacy) Pseudocertainty effect, the tendency to make risk-averse choices if the expected outcome is positive, but make risk-seeking choices to avoid negative outcomes. [74] Status quo bias, the tendency to prefer things to stay relatively the same. [75] [76] System justification, the tendency to defend and bolster the ...
Economists and behavioral scientists use a related term, sunk-cost fallacy, to describe the justification of increased investment of money or effort in a decision, based on the cumulative prior investment ("sunk cost") despite new evidence suggesting that the future cost of continuing the behavior outweighs the expected benefit.
The sunk-cost problem helps explain why it was so hard to end that war. It is worth considering this problem as we reflect on current wars. The sunk-cost fallacy applies in our thinking about the ...
Sunk costs fallacy - refusal to leave a situation because you have already put large amounts of ... (or refuting because the arguer is wealthy). (Opposite of appeal ...
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This could be because of the sunk-cost fallacy. It’s a term borrowed from the finance world, but you don’t have to know a ton about economics to get it. “The sunk-cost fallacy refers to the ...
Gambler's fallacy (aka sunk cost bias), the failure to reset one's expectations based on one's current situation. For example, refusing to pay again to purchase a replacement for a lost ticket to a desired entertainment, or, refusing to sell a sizable long stock position in a rapidly falling market.