THAT human beings often continue to pour money into bad projects because they have already invested in them and cannot bring themselves to lose that investment is well known. Indeed the sunk-cost fallacy, as this phenomenon is called, is frequently cited as an example of people failing to beha...
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 is a cognitive bias where investors continue a strategy from the reluctance to forego invested capital, time, and effort.
sunk costs fallacyAn assertion widespread in economics, psychology, and managementmaintains that giving weight to sunk costs is irrational. However, there is a growingdiscussion which points to some aspects of such behaviour which may indicate thatunder certain circumstances giving weight to sunk costs...
Understanding the sunk cost fallacy To test the fallacy in a real-world scenario, Blumer and Arkes conducted an experiment. They decided to sell discounted seasonal tickets at a theatre to determine if the amount of money spent on a ticket influenced the frequency with which people attended. ...
01 Introduction to Economics Marginal Revolution University (MRU) 03:32 02 Opportunity Cost and Tradeoffs 04:39 03 Marginal Thinking and the Sunk Cost Fallacy 06:19 04 The Demand Curve 03:31 05 The Supply Curve 02:55 06 The Equilibrium Price and Quantity 04:51 07 Understanding the Demand Cu...
And since this tendency is so deeply ingrained in human behavior, it’s important to understand how the sunk cost fallacy works so we can make good decisions based on logic—not dig ourselves into a deeper and deeper hole. What is a sunk cost? In economics, a “sunk cost” is an ...
In addition to the sunk cost fallacy we have a number of other interesting behavioral economics experiments in our arsenal including questions related to availability bias, anchoring bias, questions related to probability assessments, and more. With MobLab, you can put your students into mini behavio...
While most of the evidence for the sunk cost fallacy comes fromindividual decisions, it may also influence the decisions of groups. In fact, it is sometimes referred to as theConcord fallacy, because the French and British governments continued funding the doomed supersonic airliner long after it...
This fallacy is also sometimes referred to as the Concorde fallacy, after the method of funding the supersonic transport jet jointly created by the governments of France and Britain. Despite the fact that the Concorde is beautiful and as safe as any other jet transport, it was very costly to...