The Sunk Cost Fallacy - Deepstash
How To Become a Better Decision-Maker

Learn more about timemanagement with this collection

Understanding the importance of decision-making

Identifying biases that affect decision-making

Analyzing the potential outcomes of a decision

How To Become a Better Decision-Maker

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The Sunk Cost Fallacy

We want to finish what we've started because of previously invested resources, even if it is better to quit and use our limited resources elsewhere for better returns.

What you can do about it:

  • Every decision has two costs. The first is the actual amount of money, time, or energy, and the second is the benefit you would have gotten from the next best alternative.
  • Do a quarterly inventory of your commitments. Decide if continuing a goal or commitment is worth it.
  • Ask yourself if you were just starting this endeavour today, would you still do it?

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We All Tend To Make The Same Mental Mistakes

We All Tend To Make The Same Mental Mistakes

Economists used to believe that people will always choose the option that maximizes their well-being. But people act against their rational self-interest all the time.

We procrastinate and eat junk food and say yes to the things we don't have time for. Two Israeli psycholo...

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6.85K reads

The Zeigarnik Effect

This effect describes our tendency to remember incomplete or interrupted tasks better than completed tasks. Each unfinished task takes up some of your attention, splitting your focus. It also interferes with your sleep.

What you can do about it:

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The Mere Urgency Effect

This bias addresses why we do unimportant tasks we think are time-sensitive over tasks that are not time-sensitive, even if the non-time-sensitive tasks provide greater rewards.

How to overcome this bias:

  • Use the Eisenhow...

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4.9K reads

Hedonic Adaptation

We quickly return to a relatively stable level of happiness despite positive or negative external events. We pursue a promotion and believe it will make us happy. When we get it, we are temporarily happier, only to get back to our baseline levels the next week.

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2.45K reads

Present Bias

We tend to choose a smaller, immediate reward over a larger reward in the future. For example, playing video games is more enjoyable than writing or coding or designing.

What you can do about it:

  • Help your future self...

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2.35K reads

Complexity Bias

We are inclined to believe that complex solutions and explanations are better than simple ones. The perception of complexity often leads to avoidance.

What you can do about it:

  • Instead of seeking to understand a concept fully,

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2.29K reads

The Planning Fallacy

We tend to underestimate the time it will take to complete a future task despite knowing that previous tasks have taken longer.

What you can do about it:

  • Break projects down into smaller parts and estimat...

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2.91K reads

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ethho

I wish I knew about the 80/20 rule much earlier.

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Sunk Cost Fallacy

It describes our tendency to commit to something just because we've already invested resources in it—even if it would be better to give up on it.

How to control it: Always reevaluate your processes in light of new evidence.

The Sunk Cost Fallacy

The Sunk Cost Fallacy

“Sunk costs” are money, time, or effort we’ve already spent and can’t get back.

Cultivate a habit of admitting your mistakes. Ask yourself: If the past didn’t exist and you’re just starting out now, what would you do?”

The sunk cost fallacy

The sunk cost fallacy

Humans are especially susceptible to the “sunk cost fallacy”—a psychological effect where we feel compelled to continue doing something just because we’ve already put time and effort into it.

But the reality is that no matter what you spend your time doing, you can never get that time ba...

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