History Main / SunkCostFallacy

** "Free-to-play" MMORPG games. After sinking substantial money into the game (to get powerups that nonpayers wouldn't have), the player feels compelled to continue, even when the grind is getting difficult. This is especially true of games that experience (or worse, levels) are lost for death. You pay up, or one lag-related death takes an enormous amount of experience. Despite getting to the point where even 0.10% experience takes hours while death loss takes only seconds, the player continues to play. It's actually worse in some ways than for subscription-based, since supposedly "nobody forced you to pay" (although the game itself may be balance-weighted toward payment, by making items scarce and leveling slow).

* "Free-to-play" MMORPG games. After sinking substantial money into the game (to get powerups that nonpayers wouldn't have), the player feels compelled to continue, even when the grind is getting difficult. This is especially true of games that experience (or worse, levels) are lost for death. You pay up, or one lag-related death takes an enormous amount of experience. Despite getting to the point where even 0.10% experience takes hours while death loss takes only seconds, the player continues to play. It's actually worse in some ways than for subscription-based, since supposedly "nobody forced you to pay" (although the game itself may be balance-weighted toward payment, by making items scarce and leveling slow).

* "Free-to-play" MMORPG games. After sinking substantial money into the game (to get powerups that nonpayers wouldn't have), the player feels compelled to continue, even when the grind is getting difficult. This is especially true of games that experience (or worse, levels) are lost for death. You pay up, or one lag-related death takes an enormous amount of experience. Despite getting to the point where even 0.10% experience takes hours while death loss takes only seconds, the player continues to play. It's actually worse in some ways that subscription-based, since supposedly "nobody forced you to pay" (although the game itself may be balance-weighted toward payment, by making items scarce and leveling slow).

* "Free-to-play" MMORPG games. After sinking substantial money into the game (to get powerups that nonpayers wouldn't have), the player feels compelled to continue, even when the grind is getting difficult. This is especially true of games that experience (or worse, levels) are lost for death. You pay up, or one lag-related death takes an enormous amount of experience. Despite getting to the point where even 0.10% experience takes hours while death loss takes only seconds, the player continues to play.

* The Dutch public transport card system started out as a bad idea, turned out to be a worse idea, became a ''giant'' money sink, and still the government refused to just fess up and admit their mistake. A few years later, it's currently being debated as the worst thing that ever happened in the history of Dutch transport. Attempts by the government to just buy out the company responsible for the mess are still failing miserably.

* "Free-to-play" MMORPG games. After sinking substantial money into the game (to get powerups that nonpayers wouldn't have), the player feels compelled to continue, even when the grind is getting difficult. This is especially true of games that experience (or worse, levels) are lost for death. You pay up, or one lag-related death takes an enormous amount of experience. Despite getting to the point where even 0.10% experience takes hours while death loss takes only seconds, the player continues to play.

--> "[[http://www.dailykos.com/story/2011/05/18/977051/-Brilliant-Stephen-Colbert-piece-on-renewed-torture-debate We must do whatever it takes to justify what we've already done.]]"

* The Dutch public transport card system started out as a bad idea, turned out to be a worse idea, became a ''giant'' money sink, and it currently being debated as the worst thing that ever happened in the history of Dutch transport. Attempts by the government to just buy out the company responsible for the mess are still failing.

* Stephen Colbert, on TheColbertReport, summed it up quite succinctly when discussing the American dilemma of, is [[ColdBloodedTorture torture justified,]] since it helped to capture and kill a hated terrorist? Stephen's usual InsaneTrollLogic is applied to the point where, because America has already lost its beloved moral superiority by using torture, they have to ''keep'' torturing until it solves all of our problems, or:

** This was long argued to be the main reason why Russia lost the RussoJapaneseWar. By the end of the war Japan was winning militarily, but its economy was stretched to the breaking point, and their mobilization resources were completely depleted, as they've started drafting kids and geezers into the army, with the predictable outcome for troops quality and morale. Some analysts say that had Russia pushed just for a couple of months more, even in the wake of the horrific losses like Tsushima and Mukden, Japan would've sued for peace. On the other hand the Tsar's government had really lousy intelligence and ''[[DidntSeeThatComing didn't know that]]'', so they've decided to [[KnowWhenToFoldEm cut their losses]] and sued first.

** The above examples simply point out that the Sunk Cost fallacy should account ''[[http://en.wikipedia.org/wiki/Utility utility]]'', not merely abstract value. Let's return to the carnival game example, where the player had sunk $8 into the game, victory was sure at $15, and the prize was available for purchase for $5 at the store ''tomorrow''. Should the player desire to give one's child/date a memento of the fun day at the carnival, an individual might decide quite rationally that the utility of acquiring the prize that day, at the carnival, for $7 was higher than getting it tomorrow for $5. As long as dollars are replaced with utility, the Sunk Cost fallacy is inescapable. Gain/loss of reputation, happiness at acquiring a good in a particular context, secondary effects (such as the charity example), and so on would all roll up into utility, which is a better measure, but sadly one impossible to quantify exactly.

** The above examples simply point out that the Sunk Cost fallacy should account ''[[http://en.wikipedia.org/wiki/Utility utility]]'', not merely abstract value. Let's return to the carnival game example, where the player had sunk $8 into the game, victory was sure at $15, and the prize was available for purchase for $5 at the store ''tomorrow''. Should the player desire to give one's child/date a memento of the fun day at the carnival, an individual might decide quite rationally that the utility of acquiring the prize that day, at the carnival, for $7 was higher than getting it tomorrow for $5. As long as dollars are replaced with utility, the Sunk Cost fallacy is inescapable. Gain/loss of reputation, happiness at acquiring a good in a particular context, secondary effects (such as the charity example), and so on would all roll up into utility, which is a better measure, but sadly one impossible to quantify exactly. However, utility is often subjective, and even when objective is often hard to quantify.

** The above examples simply point out that the Sunk Cost fallacy should account ''[[http://en.wikipedia.org/wiki/Utility utility]]'', not merely abstract value. Let's return to the carnival game example, where the player had sunk $8 into the game, victory was sure at $15, and the prize was available for purchase for $5 at the store ''tomorrow''. Should the player desire to give one's child/date a memento of the fun day at the carnival, an individual might decide quite rationally that the utility of acquiring the prize that day, at the carnival, for $7 was higher than getting it tomorrow for $5. As long as dollars are replaced with utility, the Sunk Cost fallacy is inescapable. Gain/loss of reputation, happiness at acquiring a good in a particular context, secondary effects (such as the charity example), and so on would all roll up into utility, which is a better measure, but sadly one impossible to quantify exactly.

** This is actually good play when the player himself has sunk a lot of money in, but ''so has everyone else''. In those situations, it's rational to stay in with very low winning chances, simply because the payoff when that 1/44 or whatever chance hits is so high.
*** Which brings us to the Gambler's Fallacy.

--> "We must do whatever it takes to justify what we've already done."

** The above examples simply point out that the Sunk Cost fallacy should account [[http://en.wikipedia.org/wiki/Utility ''utility'']], not merely dollars. Let's return to the carnival game example, where the player had sunk $8 into the game, victory was sure at $15, and the prize was available for purchase for $5 at the store ''tomorrow''. Should the player desire to give one's child/date a memento of the fun day at the carnival, an individual might decide quite rationally that the utility of acquiring the prize that day, at the carnival, for $7 was higher than getting it tomorrow for $5. As long as dollars are replaced with utility, the Sunk Cost fallacy is inescapable. Gain/loss of reputation, happiness at acquiring a good in a particular context, secondary effects (such as the charity example), and so on would all roll up into utility, which is a better measure, but sadly one impossible to quantify exactly.

* Within sociology, the combination of this and MyGirlIsNotASlut often leads to girls feeling resigned to becoming sexual promiscuous after having had sex once. After all, they can only lose their virginity once and what does it matter after that?

** or even after its obvious they are discussing with irrational fools that insult them rather than argue with them.

* The relationship between military situations and this fallacy is rarely clear-cut. If the enemy is near or at their breaking point in morale, equipment, or reinforcements, a decision to keep pushing them may work. If this decision was based on one's ''own'' sunk costs, it was at worst RightForTheWrongReasons.
** Also, it might well be that reinforcing a losing battle might be preferable than any other potential outcome, particularly if not doing so would lead to a rapid collapse. This was part of the reason why the Western Allied forces tasked with guarding the evacuation beaches in 1940 fought on long after their positions became highly untenable: they were buying time for everybody else to escape and fight again.
*** Cheese-eating surrendermonkeys, people call them.
*** The fact that no one told them there were boats to fall back to and they thought they were the first line in a last stand probably had something to do with it as well.

* Can be applied to many government programs. We'll spend millions on A to fix B. B isn't getting fixed. Well it's because we need more money for A.

** This works better with non-cumulative risks (like Lotto); otherwise, see pot committed above.

** See pot committed above.

** This was long argued to be the main reason why Russia lost the RussoJapaneseWar. By the end of the war Japan was winning militarily, but its economy was stretched to the breaking point, and their mobilization resources were completely depleted, as they've started drafting kids and geezers into the army, with the predictable outcome for troops quality and morale. Some analysts say that had Russia pushed just for a couple of months more, even in the wake of the horrific losses like Tsushima and Mukden, Japan would've sued for peace. On the other hand the Tsar's government had really lousy intelligence and ''[[WhatAnIdiot didn't know that]]'', so they've decided to [[KnowWhenToFoldEm cut their losses]] and sued first.

* 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?

** They're more likely to use a kind of Skinner Box and string along small rewards.

** The above examples simply point out that the Sunk Cost fallacy should account [[http://en.wikipedia.org/wiki/Utility ''utility'']], not merely dollars. Let's return to the carnival game example, where the player had sunk $7 into the game, victory was sure at $15, and the prize was available for purchase for $5 at the store ''tomorrow''. Should the player desire to give one's child/date a memento of the fun day at the carnival, an individual might decide quite rationally that the utility of acquiring the prize that day, at the carnival, for $8 was higher than getting it tomorrow for $5. As long as dollars are replaced with utility, the Sunk Cost fallacy is inescapable. Gain/loss of reputation, happiness at acquiring a good in a particular context, secondary effects (such as the charity example), and so on would all roll up into utility, which is a better measure, but sadly one impossible to quantify exactly.