Sunk cost fallacy can influence investment decisions from "summary" of Advances in Behavioral Finance by Richard H. Thaler
One of the key concepts that Richard H. Thaler discusses in "Advances in Behavioral Finance" is how the sunk cost fallacy can impact investment decisions. The sunk cost fallacy refers to the tendency for individuals to continue investing in a losing proposition simply because they have already sunk money into it. In other words, people are reluctant to cut their losses and move on, even when it is clear that doing so would be the rational choice. Thaler explains that the sunk cost fallacy can be a powerful force in shaping investment decisions. People often feel a sense of attachment to investments that they have already made, regardless of whether those investments are actually paying o...
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