History Main / SunkCostFallacy

8th Apr '16 6:35:34 PM ProfN
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* It's also known in social psychology as a great way to bring someone into a group. Cults are known for using this: How about you read a flyer? Sure, that cost nothing. Hey, why don't you answer this quiz on how happy you are with your life? Well... You've already read the flyer, that's not much more effort. How about going to a session?

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* It's also known in social psychology as a great way to bring someone into a group. Cults are known for using this: How about you read a flyer? Sure, that cost nothing. Hey, why don't you answer this quiz on how happy you are with your life? Well... You've already read the flyer, that's not much more effort. How about going to a session? session? Once the new recruit has spend hundreds, if not thousands of dollars on seminars and training, they are unlikely to be willing to go cold turkey; cognitive dissonance becomes involved (as quitting would require admitting to themselves that they were duped, which is something no one wants to think about themselves).
25th Mar '16 7:07:17 PM eroock
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!!'''[[http://en.wikipedia.org/wiki/Sunk_costs#Loss_aversion_and_the_sunk_cost_fallacy Sunk cost fallacy]]''':

A cognitive bias that causes Bob to remain committed to a course of action because he's already spent time or resources on it, even though the commitment is irrational (i.e. he would be better off walking away). When Bob is engaging in this fallacy, he will remain set on the course of action even if the profit from his success would be less than what he's already spent.

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!!'''[[http://en.[[http://en.wikipedia.org/wiki/Sunk_costs#Loss_aversion_and_the_sunk_cost_fallacy Sunk cost fallacy]]''':

A
fallacy]] is a cognitive bias that causes Bob to remain committed to a course of action because he's already spent time or resources on it, even though the commitment is irrational (i.e. he would be better off walking away). When Bob is engaging in this fallacy, he will remain set on the course of action even if the profit from his success would be less than what he's already spent.



!!! Also called

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!!! !! Also called



!!!Examples:

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!!!Examples:!!Examples:
12th Feb '16 1:15:34 PM Andyroid
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* Reacher Gilt's scam in ''Discworld/GoingPostal'' relies heavily on this. Even as the service on the Grank Trunk semaphore line gets worse and worse, he sweet-talks investors and board-members into "throwing good money after bad" while pocketing most of it and covering it up with tricky accounting and corporate buzzwords like "embracing diversity" and "synergistically".

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* Reacher Gilt's scam in ''Discworld/GoingPostal'' relies heavily on this. Even as the service on the Grank Grand Trunk semaphore line gets worse and worse, he sweet-talks investors and board-members into "throwing good money after bad" while pocketing most of it and covering it up with tricky accounting and corporate buzzwords like "embracing diversity" and "synergistically"."synergistically". [[BoxedCrook Not-quite-reformed con artist]] Moist von Lipwig is equal parts impressed and [[EvenEvilHasStandards disgusted]] when he realizes what Gilt is up to.
11th Feb '16 5:12:23 PM zerohelix
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* Similarly, [[spoiler: Locus]] from RedVsBlue. He has to keep following orders because admitting he has a choice would mean admitting he had a choice towards his previous actions.

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* Similarly, [[spoiler: Locus]] from RedVsBlue. Machinima/RedVsBlue. He has to keep following orders because admitting he has a choice would mean admitting he had a choice towards in all his previous actions.



* Being statistically "pot-committed" in poker is not this fallacy: sometimes, the pot is so big relative to the cost of calling that the strategically correct choice is to call even when your odds are slim (but non-zero). [[note]]For example: Texas Hold'em, family pot, you're holding an Ace and another suited card with a flush draw on the turn, and the board shows no pair nor any chance of a straight flush. Your chances of making the nut flush on the river are slightly worse than 1 in 5, but as long as you can see the river by contributing less than 1/5th of the pot, it's a mathematically sound play to call.[[/note]] This is more likely to happen in limit games; in non-limit games, players that already have a strong hand are likely to size their bets such that it no longer makes mathematical sense for players on long-shot draws to call. It is part of the strategy of tournament poker to recognize situations where one's stack is low enough with respect to the size the pot is likely to reach that it is easy to become pot-committed. At that point, one is advised to either give up before becoming pot-committed, or shove all-in early so as to increase one's odds of winning by making it more likely that the other player(s) will fold. It is a ''further'' part of the strategy to [[IKnowYouKnowIKnow recognize when other players are in that situation]] and not enter pots with them if unprepared to play for all their chips.

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* * Being statistically "pot-committed" in poker is not this fallacy: sometimes, the pot is so big relative to the cost of calling that the strategically correct choice is to call even when your odds are slim (but non-zero). [[note]]For example: Texas Hold'em, family pot, you're holding an Ace and another suited card with a flush draw on the turn, and the board shows no pair nor any chance of a straight flush. Your chances of making the nut flush on the river are slightly worse than 1 in 5, but as long as you can see the river by contributing less than 1/5th of the pot, it's a mathematically sound play to call.[[/note]] This is more likely to happen in limit games; in non-limit games, players that already have a strong hand are likely to size their bets such that it no longer makes mathematical sense for players on long-shot draws to call. It is part of the strategy of tournament poker to recognize situations where one's stack is low enough with respect to the size the pot is likely to reach that it is easy to become pot-committed. At that point, one is advised to either give up before becoming pot-committed, or shove all-in early so as to increase one's odds of winning by making it more likely that the other player(s) will fold. It is a ''further'' part of the strategy to [[IKnowYouKnowIKnow recognize when other players are in that situation]] and not enter pots with them if unprepared to play for all their chips.
11th Feb '16 5:07:20 PM zerohelix
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* ''WebComic/TheOrderOfTheStick'''s Redcloak suffers from this, as expressed in ''Recap/StartOfDarkness''; It's not that he believes in the Plan as much he believes hat if he gives it up, it'll make all of the horrible things he's done worthless, in spite of being told from both his brother and [[BigBad Xykon]] himself what an empty excuse this is.

to:

* ''WebComic/TheOrderOfTheStick'''s Redcloak suffers from this, as expressed in ''Recap/StartOfDarkness''; It's not that he believes in the Plan as much he believes hat that if he gives it up, it'll make all of the horrible things he's done worthless, in spite of being told from both his brother and [[BigBad Xykon]] himself what an empty excuse this is.is.
* Similarly, [[spoiler: Locus]] from RedVsBlue. He has to keep following orders because admitting he has a choice would mean admitting he had a choice towards his previous actions.
26th Jan '16 4:57:10 PM karstovich2
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* An "ideal" option that is not economically viable in your particular situation is just that: not viable, and, therefore, should not factor into the equation. Going back to the car example, stringing by on ad-hoc repairs may ''be'' the only viable alternative if the owner ''just doesn't have'' the money to buy a new car or the credit to get a loan that would cost less than the repair costs for the period of that loan. Previous repair costs ''are'' sunk, but it's also no use in bemoaning what you ''[[WhatCouldHaveBeen could have]]'' afforded if you hadn't paid for those; all that matters is what you can afford ''now''.

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* An "ideal" option that is not economically viable in your particular situation is just that: not viable, and, therefore, should not factor into the equation. Going back to the car example, stringing by on ad-hoc repairs may ''be'' the only viable alternative if the owner ''just doesn't have'' the money to buy a new car or the credit to get a loan that would cost less than the repair costs for the period of that loan.loan (or if other means of getting around, e.g. public transportation, biking, or walking, are also not on the table). Previous repair costs ''are'' sunk, but it's also no use in bemoaning what you ''[[WhatCouldHaveBeen could have]]'' afforded if you hadn't paid for those; all that matters is what you can afford ''now''.
20th Dec '15 3:29:53 AM Andyroid
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to:

* Reacher Gilt's scam in ''Discworld/GoingPostal'' relies heavily on this. Even as the service on the Grank Trunk semaphore line gets worse and worse, he sweet-talks investors and board-members into "throwing good money after bad" while pocketing most of it and covering it up with tricky accounting and corporate buzzwords like "embracing diversity" and "synergistically".
11th Nov '15 6:35:30 PM cybertoy0
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to:

* ''WebComic/TheOrderOfTheStick'''s Redcloak suffers from this, as expressed in ''Recap/StartOfDarkness''; It's not that he believes in the Plan as much he believes hat if he gives it up, it'll make all of the horrible things he's done worthless, in spite of being told from both his brother and [[BigBad Xykon]] himself what an empty excuse this is.
12th Sep '15 5:49:17 AM DeepRed
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* When done badly, the policy doctrine of 'too big to fail' can become this. One such example was the car maker British Leyland, which was bailed out by the British Government in 1968, but still failed to reverse its long-term decline. Another example is the general concept of corporate welfare.
23rd Aug '15 12:30:57 PM Kadorhal
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** Remember, falling for the reverse is just as bad. If option B only costs $5,- and option A costs $15,- of which $14,- has already been spent, option A is the better choice, no matter how cheated you feel over the difference. The choice here is still made based on how much both options will cost from where you are right now.
* When abandoning the current plan has costs that outweigh the benefit of switching to a better plan; for example, a penalty clause for cancellation of a contract that is higher than simply paying the contracted price until the contract runs out. Cell phones and cable[=/=]satellite services, health clubs, and auto leases often have these. (For example, a cell phone contract is 2 years at $20.00 a month, and has a $250.00 cancellation penalty. If 12 months or fewer remain on the contract, it costs ''more'' to cancel than it does to simply continue paying the contracted amount until the contract expires.) Another example would be, if in the contest above, the person had spent $11 rather than $8. '''Assuming victory was certain at $15''', continuing to play would be a reasonable decision. Continuing to play costs $4 more, making $15 total. Stopping after spending $11 and simply buying the prize elsewhere for $5 costs $16 total -- so why stop?

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** Remember, falling for the reverse is just as bad. If option B only costs $5,- $5, and option A costs $15,- $15, of which $14,- $14 has already been spent, option A is the better choice, no matter how cheated you feel over the difference. The choice here is still made based on how much both options will cost from where you are right now.
* When abandoning the current plan has costs that outweigh the benefit of switching to a better plan; for example, a penalty clause for cancellation of a contract that is higher than simply paying the contracted price until the contract runs out. Cell phones and cable[=/=]satellite cable/satellite services, health clubs, and auto leases often have these. (For For example, a cell phone contract is 2 years at $20.00 a month, and has a $250.00 cancellation penalty. If 12 months or fewer remain on the contract, it costs ''more'' to cancel than it does to simply continue paying the contracted amount until the contract expires.) Another example would be, if in the contest above, the person had spent $11 rather than $8. '''Assuming victory was certain at $15''', continuing to play would be a reasonable decision. Continuing to play costs $4 more, making $15 total. Stopping after spending $11 and simply buying the prize elsewhere for $5 costs $16 total -- so why stop?
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