Sunkcost fallacy influences behavior from "summary" of Thinking, Fast and Slow... in 30 Minutes by 30 Minute Expert Summary Staff
The sunk cost fallacy is a common cognitive bias that influences decision-making. People tend to continue investing in a certain course of action simply because they have already invested time, money, or effort into it, even if it no longer makes sense to do so. This bias can lead individuals to make irrational decisions based on past investments rather than future prospects. For example, imagine someone buys a ticket to a movie but then realizes they are not interested in watching it. Despite this, they may still go to the movie because they feel that they have already spent money on the ticket. In reality, the cost of the ticket is already sunk and cannot be recovered, so the rational decision would be to skip the movie and do something else instead. The sunk cost fallacy can also influence behavior in more significant ways, such as in business or investment decisions. People may continue to allocate resources to a failing project or investment because they have already committed a large amount of time or money to it, even if it would be more beneficial to cut their losses and move on to a different opportunity. It is important to recognize when the sunk cost fallacy is at play and try to make decisions based on future outcomes rather than past investments. By being aware of this bias, individuals can avoid making poor decisions that are influenced by sunk costs and focus on what will be most beneficial in the long run.
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