Define The Sunk Cost Fallacy: Integrate the reading to support your definition. Show how the fallacy works; what are its causes? What are the mechanisms at work? What are its dangers? Argue how we can counteract
The Sunk Cost Fallacy: What can a person do to become more aware of it? What should a person practice to minimize its effects? What are specific strategies, habits of mind, to directly manage oneself away from The Sunk Cost Fallacy?
What struck you most in the reading?
What particular experiment, outcome or idea do you find intriguing?
What are the implications about the Sunk Cost Fallacy that you find most interesting?
Have you experienced this fallacy?
What was the situation? How did you manage it? Would you have managed it differently now that you know about the Sunk Cost Fallacy?
What are some specific ways to counteract the Sunk Cost Fallacy?
How would the solutions look in a real-life scenario, say, for example, in a relationship?
Or in a scenario similar to those in the reading? What are the specific things a person might do to process their way out of the Sunk Cost Fallacy? THE SUNK COST FALLACY POSTING I
n his essay, McRaney outlines the main drivers to the Sunk Cost Fallacy: o you must first understand how your fear of loss leads to the sunk cost fallacy (para 4). “Fear of loss” is one of the drivers of this fallacy.
Although it sounds simple to observe, it’s actually harder to observe in ourselves because the fear of loss is within us. o “You tend to focus more on what you may lose in the bargain than on what you stand to gain” (para 6). This particular driver of the Sunk Cost Fallacy is subtle. It’s a shift between focusing on not losing to focusing on what “what you stand to gain.”
Focusing on the future gain is more about the feelings of how good the experience will be when attained, and how that is more motivating than negating the feeling of present loss. o “Your loss aversion system is always vigilant, waiting on standby to keep you from giving up more than you can afford to spare, so you calculate the balance between cost and reward whenever possible” (para 8).
This balancing act between cost and reward is underlying much of thinking and actions. We are easily led into the Sunk Cost fallacy because we are often already tilting toward worrying about the costs and pain of those costs, which lead us to the Sunk Cost Fallacy. o “As an emotional human, your aversion to loss often leads you right into the sunk cost fallacy” (para 11).
Emotions, more pointedly, the fear of feeling the pain of loss, is a huge driver right into the Sunk Cost Fallacy. How do we assess value? o “You see something as a good value when you predict the pain of loss will be offset by your joy of gain” (para 9).
This reveals the cost/reward calculation that we’re always doing in our minds, many times in the background of our choices. If we brought the cost/reward balancing calculation to the forefront of our minds we might have a better chance of not falling into the Sunk Cost Fallacy.
Problem: if something negates that value, we’re left with a quandary. Should we take the loss and move on, or do we override the feelings of loss and suffer through? McRaney points out that we often do not face the loss of value; we soldier on and suffer.
We have the ability to reflect. We can think through a situation amidst the swirl of emotions and denial of permanent loss. Upon reflection we can see and feel the regret of lost time and money. This is where emotions can aid us. Rather than suppressing the feelings of loss, we can face and feel them. That might be a motto for counteracting the Sunk Cost Fallacy: “Face and Feel the Loss.”
What this does is break the spell of the emotions that drive the illogical thinking: “If I pour more time and money into this losing thing, then I’ll retrieve the time and money I’m pouring into it.” But if we face the loss, and feel the real pain of that loss, then that bursts the bubble of the Sunk Cost Fallacy.
We can discern for ourselves what “efforts were in vain,” and what “losses permanent.” It may hurt, but that’s the key; pain is the truth-teller. Pain points to what is the true loss. From there we can lick our wounds and move on to something more worthy of our time and money.