3. Sunk Cost Fallacy - Deepstash
3. Sunk Cost Fallacy

3. Sunk Cost Fallacy

The old saying about ‘throwing good money after bad’ expresses the heart of this fallacy: the tendency to persevere with a project once you’ve invested “time, money, energy or love” in it, even after the thrill or profit potential is gone. This is why marketers stick with campaigns that fail to show results, why investors hold stocks that keep losing value, and why Britain and France sunk billions into the Concorde aircraft when it was clearly a dud. When deciding how long you want to continue a project, exclude incurred costs from your evaluation and keep the good money

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Dobelli shared some common thinking mistakes. Knowing these errors won’t help you avoid them completely, but it will help you make better decisions – or at least teach you where you slipped.

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Making Better Decisions

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11. Sunk Cost Fallacy:

11. Sunk Cost Fallacy:

People continue to invest in a decision or project based on the resources already committed, even when it's clear that further investment won't lead to better outcomes. For instance, you might keep pouring money into a failing business because you've already invested a significant amount.

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