Sunk cost effect

However, David Gal and Derek Rucker argue that the sunk cost effect cannot be due to loss aversion because there is no comparison of a loss to a gain. The "variable costs" for this project might include data centre power usage, for example.

About 50 million people were still playing in early — still impressive considering the fantasy megagame World of Warcraft boasts about a quarter as many players. It is not typically possible to later "demote" one's brand names in exchange for cash. He writes that when factoring the costs of any exchange, you tend to focus more on what you may lose in the bargain than on what you stand to gain.

But, if you buy two or more books this year, might I recommend one of them be a celebration of self delusion? Whenever this clinging to the past becomes a factor in making decisions about your future, you run the risk of being derailed by the sunk cost fallacy. The urge to stay the course and keep your farm flourishing gets more powerful the more you invest in it, the more you ask others for help, the more time you spend thinking about it.

sunk cost fallacy fallacy

Independent Digital News and Media, 22 Feb. A common example of a sunk cost for a business is the promotion of a brand name. Predictably irrational, revised and expanded edition: The hidden forces that shape our decisions.

the sunk cost effect is the decision to do what quizlet

Alternatively, they may take a sense of pride in having recognized the opportunity cost of the alternative use of time.

A game with this many players must promise potent, unadulterated joy, right? In either case, the ticket-buyer has paid the price of the ticket so that part of the decision no longer affects the future.

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The Sunk Cost Fallacy Is Ruining Your Decisions. Here’s How