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This model is a reminder to cut your losses and focus on future opportunities rather than getting pulled down by past decisions.
Nam Pyrrho, Aristo, Erillus iam diu abiecti. Sed ut iis bonis erigimur, quae expectamus, sic laetamur iis, quae recordamur. Sit enim idem caecus, debilis. Laelius clamores sofòw ille so lebat Edere compellans gumias ex ordine nostros. Illud urgueam, non intellegere eum quid sibi dicendum sit, cum dolorem summum malum esse dixerit. Et hunc idem dico, inquieta sed ad virtutes et ad vitia nihil interesse. Cave putes quicquam esse verius. Gerendus est mos, modo recte sentiat.
Nescio quo modo praetervolavit oratio. Nec vero intermittunt aut admirationem earum rerum, quae sunt ab antiquis repertae, aut investigationem novarum. Si quidem, inquit, tollerem, sed relinquo. Quare ad ea primum, si videtur; Ut scias me intellegere, primum idem esse dico voluptatem, quod ille don. Nullum inveniri verbum potest quod magis idem declaret Latine, quod Graece, quam declarat voluptas. Atqui haec patefactio quasi rerum opertarum, cum quid quidque sit aperitur, definitio est. Deinde disputat, quod cuiusque generis animantium statui deceat extremum. Hosne igitur laudas et hanc eorum, inquam, sententiam sequi nos censes oportere? Quorum sine causa fieri nihil putandum est.
- Ask, ‘does this cost have an impact on what will happen in the future?’
Identify Sunk Co ... Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ego vero volo in virtute vim esse quam maximam; Quo plebiscito decreta a senatu est consuli quaestio Cn. Bonum integritas corporis: misera debilitas. Duo Reges: constructio interrete. De malis autem et bonis ab iis animalibus, quae nondum depravata sint, ait optime iudicari. Ergo hoc quidem apparet, nos ad agendum esse natos. Sed erat aequius Triarium aliquid de dissensione nostra iudicare. Deinde disputat, quod cuiusque generis animantium statui deceat extremum. Quod ea non occurrentia fingunt, vincunt Aristonem; Nos cum te, M. Haec para/doca illi, nos admirabilia dicamus. Dic in quovis conventu te omnia facere, ne doleas. Nam aliquando posse recte fieri dicunt nulla expectata nec quaesita voluptate. Incommoda autem et commoda-ita enim estmata et dustmata appello-communia esse voluerunt, paria noluerunt. Ex eorum enim scriptis et institutis cum omnis doctrina liberalis, omnis historia. At enim, qua in vita est aliquid mali, ea beata esse non potest. Quae hic rei publicae vulnera inponebat, eadem ille sanabat. Partim cursu et peragratione laetantur, congregatione aliae coetum quodam modo civitatis imitantur; Bork Non enim, si omnia non sequebatur, idcirco non erat ortus illinc. Et quod est munus, quod opus sapientiae? Diodorus, eius auditor, adiungit ad honestatem vacuitatem doloris. Portenta haec esse dicit, neque ea ratione ullo modo posse vivi; Huius, Lyco, oratione locuples, rebus ipsis ielunior. Ut necesse sit omnium rerum, quae natura vigeant, similem esse finem, non eundem. Quamquam te quidem video minime esse deterritum.
Identifying a Sunk Cost can be difficult when there is no precise way of comparing a loss to a gain. The desire to not appear wasteful also can limit your ability to base a decision on relevant costs exclusively, especially when you feel personally responsible for the investments representing sunk costs.
The Concorde Fallacy.
The Concorde Fallacy is an alternative name for the sunk cost fallacy, coming from the way the British and French governments continued to co-fund the development of the expensive Concorde supersonic aeroplane even after it became financially untenable. Their previous investment, financially and politically, was thought to determine the ongoing funding.
Eat too much?
A common example of the sunk cost fallacy is when someone buys a large meal, then overeats to ensure ‘they get their money worth’.
The sunk cost fallacy is an unconscious bias that arises from accounting and financial domains. It is an important consideration in decision making.
Use the following examples of connected and complementary models to weave the sunk cost fallacy into your broader latticework of mental models. Alternatively, discover your own connections by exploring the category list above.
Connected models:
- Cost-benefit analysis: to consider actual pros and cons of a choice
- Opportunity cost: to consider the potential loss of a future facing decision.
Complementary models:
- First principle thinking: in breaking down a situation to its basics.
- Inversion: considering the opposite, e.g. ‘how can we continue to make that loss again?’
- The Lindy effect: to challenge sunk costs and seeing past longevity as a potential positive.
- Availability heuristic: being overly impacted by immediate situations and losses.
- Lock-in effect: is there greater friction to breaking from the status quo.
Read N. Gregory Mankiw’s Principles of economics for information on various economic theories that involve the concept of sunk costs.
This brief article references some of the relevant studies arising from Behaviorual Economics and the Sunk Cost fallacy. Check this video resource for a quick overview of the sunk cost concept and how it applies to the Concorde supersonic plane case.
My Notes
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