After we hung up, I googled “sunk cost”. It is a term coined in economics and business, meaning “a cost that has already been incurred and can not be recovered”. It is contrasted with “prospective costs”, meaning future costs which may be incurred. The example given by Wikipedia ...
Sunk cost fallacy occurs when a person decides to continue actions because of past costs, even when the present and future costs exceed the potential benefits. The sunk cost fallacy works against rational decision-making in human decision processes, affecting everything from economic behavior to orga...
The sunk cost fallacy is a logical fallacy that entails sticking with a losing or failed venture because you’ve already invested a significant amount of time, money, or other resourcesthat you can’t get back.It hinges on the idea that because you’ve already incurred costs, you need to ...
Sunk costs are only incurred once, but the fixed costs are recurring. Take, for example, the case of a pharmaceutical company. The cost it incurred on R&D is a sunk cost irrespective of the fact that whether the formula it developed will be successful or not. While the rent it pays for...
Attendees who paid fullpricefor their tickets experienced the greatest sunk costs, meaning they were motivated to spend time at the theatre to recoup the higherpriceof the tickets. Why does the sunk cost fallacy occur? The sunkcostfallacy occurs because decision-making is often irrational and base...
And, the costs of doing payroll are also sunk costs. So, payroll taxes, federal unemployment (FUTA), and state unemployment (SUTA) taxes are all sunk costs, too. Include any benefits, such as health insurance or retirement contributions, in the sunk costs. ...
Julia Galef: The Sunk Costs Fallacy | Big Think 32 related questions found What is the meaning of sunk cost fallacy? The Sunk Cost Fallacy describesour tendency to follow through on an endeavor if we have already invested time, effort, or money into it, whether or not the current costs ou...
Sunk Cost Fallacy is a cognitive bias where investors continue a strategy from the reluctance to forego invested capital, time, and effort.
Understanding Sunk Costs A sunk cost refers to money that has already been spent and cannot be recovered. A manufacturing firm, for example, may have a number of sunk costs, such as the cost of machinery, equipment, and the lease expense on the factory. Sunk costs are excluded from a sel...
The Sunk Costs FallacyMarshall GoldsmithLowe, Derek, and 2015. "The Sunk Cost Fallacy." In the Pipeline, June 2, 2015. http://blogs.sciencemag.org/pipeline/archives/2015/06/02/the_sunk_cost_fallacy.