The sunk cost fallacy - Deepstash

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The sunk cost fallacy

It plays on this tendency of ours to emphasize loss over gain.

The term sunk cost refers to any cost that has been paid already and cannot be recovered. The reason we can't ignore the cost, even though it's already been paid, is that we're wired to feel loss far more strongly than gain.

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MORE IDEAS FROM THE SAME ARTICLE

It's a thinking mistake and it occurs when we confuse selection factors with results. 

Professional swimmers don't have perfect bodies because they train extensively. Rather, they are good swimmers because of their physiques.

We believe our memories more than facts. Our memories are highly fallible and plastic. And yet, we tend to subconsciously favor them over objective facts. 

Don't base a factual decision on your gut instinct without at least exploring the data objectively first.

It happens when we rationalize our purchases, even if we're not satisfied with what we've got.

We're pretty good at convincing ourselves that those flashy, useless, badly thought-out purchases are necessary after all. 

This is when we mistakenly think that eventually, our luck has to change for the better.

Somehow, we find it impossible to accept bad results and give up—we often insist on keeping at it until we get positive results, regardless of what the odds of that happening actually are.

It essentially works like this: rather than making a decision based on pure value for investment (time, money, etc.), we factor in comparative value—that is, how much value an option offers when compared to another option.

We surround ourselves with it: We tend to like people who think like us; if we agree with someone's beliefs, we're more likely to be friends with them.

This makes sense, but it means that we subconsciously begin to ignore or dismiss anything that threatens our world views

It is a glitch in our thinking that occurs when we place too much weight on past events, believing that they will have an effect on future outcomes.

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Most decision-making errors boil down to:

  • logical fallacies (over-generalizations, comparing apples and oranges, circular thinking)
  • limiting beliefs (underestimations of what's possible)
  • judgment biases (valuing certain factors above others)....

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Budget for the life you have. When you’re going through your budget and assigning spending categories, be realistic. 

Don’t tell yourself you’ll never buy a single discretionary item, because you’re setting yourself up for failure. Give yourself some breathing room.

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Default options

Deciding is too much effort so we’re likely to just stick with the default or safer option if it’s already been chosen for us. 

When we get offered too many choices, the same thing happens—we shut down, unable to decide. Often, we end up simply choosing anything, just to get the proc...

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