We are prone to the sunk cost fallacy from "summary" of Predictably Rational? by Richard B. McKenzie
In our daily lives, we often find ourselves struggling with decisions that involve costs we have already incurred. We tend to become attached to these costs, making it difficult for us to let them go. This phenomenon is known as the sunk cost fallacy.
The sunk cost fallacy is our tendency to let unrecoverable past costs influence our decisions about the future. We feel a sense of loss associated with these sunk costs, which makes it hard for us to move on and make rational choices.
For example, imagine you have paid for a ticket to a concert that you no longer want to attend. Despite not wanting to go, you may feel obligated to go simply because you have already spent money on the ticket. This is a classic case of the sunk cost fallacy in action.
The problem with succumbing to the sunk cost fallacy is that it can lead us to make irrational decisions that are not in our best interest. Instead of focusing on the future costs and benefits of a decision, we get caught up in past costs that we can never recover.
To overcome the sunk cost fallacy, we must learn to separate our emotions from our decision-making process. We need to focus on the potential future costs and benefits of a decision rather than letting past costs cloud our judgment.
By recognizing our tendency towards the sunk cost fallacy and making a conscious effort to avoid it, we can make more rational and effective decisions in our lives. It is important to remember that sunk costs are just that – sunk. They are in the past and should not dictate our future actions.
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