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- The Sunk Cost Fallacy - Why We Keep Investing in Things That No Longer Make Sense
The Sunk Cost Fallacy - Why We Keep Investing in Things That No Longer Make Sense
Why Time, Money, and Effort Already Spent Can Keep Us Trapped in Bad Decisions
Welcome to The Smarter Brain, a curation of thought-provoking ideas and actionable reads to help you build better habits and become more productive.
Happy reading - See you on Wednesday!
Cheers,
The Smarter Brain Team
Estimated Reading Time: 2 mins
3 Ideas for Better Habits
The More We Invest, the Harder It Is to Quit
A Swiss author and entrepreneur Rolf Dobelli best known for translating behavioral economics and cognitive biases into practical lessons for everyday decision-making.
“The sunk cost fallacy is most dangerous when we have invested a lot of time, money, energy, or love in something.”
A Classic Human Irrationality
A Harvard cognitive psychologist and bestselling author Steven Pinker whose work explores rational thinking, language, human nature, and decision-making.
“One of the most commonly cited human irrationalities is the sunk-cost fallacy.”
When Past Investments Trap Us
A Nobel Prize-winning psychologist Daniel Kahneman whose pioneering research on judgment, decision-making, and cognitive biases helped create the field of behavioral economics.
“The sunk-cost fallacy keeps people for too long in poor jobs, unhappy marriages, and unpromising research projects.”
Source: Thinking, Fast and Slow
The Mental Health App for Every Moment
From guided meditations to one-on-one coaching, our team of clinical experts and trained coaches work together to bring you science-backed care. Explore 1,000+ guided meditations for feeling more relaxed before or after your busy day.
Productivity Tools and Resources
How Susceptible Are You to the Sunk Cost Fallacy?
Explains how managers can become trapped in projects that are losing money simply because substantial resources have already been invested. It also connects the psychological effect to real-world business decisions. Read more here.
It's Ridiculously Hard to Admit Our Mistakes. Here's Why.
A recent article examining why people struggle to abandon previous choices even when evidence suggests they should change direction. It connects sunk-cost thinking with our difficulty admitting mistakes and recommends focusing on future possibilities rather than past decisions. Read more here.
Track Your Decisions
Day One - A digital journaling app that can be used to document major decisions, assumptions, and outcomes. This makes it useful for recognizing patterns such as repeatedly continuing with something simply because you've already invested heavily in it.
Build a Decision Journal
Notion can be used to create a structured decision journal where you record the decision, expected outcomes, alternatives, and later results. This is particularly useful for separating past investment from future value.
What We're Reading
Behavioral Scientist Newsletter - A strong fit for this topic because it covers research on cognitive biases, human judgment, behavior, and decision-making. The publication describes its newsletter as original reporting from the front lines of behavioral science.
Katy Milkman Newsletter - Katy Milkman, a Wharton behavioral scientist, shares research and conversations with behavioral scientists about how people can make better choices.
Brain Food
Today I Learned: A sunk cost is a resource that has already been spent and cannot be recovered. Rational decision-making should therefore focus on the future costs and benefits rather than attempting to justify what has already been lost. (Source)
Science: A 1985 experiment by Hal Arkes and Catherine Blumer found that people who had already invested money were more likely to continue an endeavor. In their theater-ticket field study, people who had paid more for season subscriptions attended more performances during the following six months. (Source)
Have a productive rest of your week,
The Smarter Brain Team
Resource Spotlight
The Sunk Cost Fallacy, Better Decisions, and Knowing When to Let Go
Monthly dispatches rooted in psychology, not stubbornness-this one's about why we keep investing in decisions simply because we've already invested so much. Explore how past commitments of money, time, effort, and relationships can make changing course feel like admitting failure, even when walking away is clearly the better choice.
The Sunk Cost Fallacy, Better Decisions, and Learning to Let Go
Monthly dispatches rooted in critical thinking, not stubbornness-this one's about why we keep holding onto jobs, projects, relationships, beliefs, and investments simply because we've already poured so much into them. Explore how past time, money, and effort can distort present decisions, making it harder to recognize when walking away is actually the rational choice.
The Sunk Cost Fallacy, Career Decisions, and Knowing When to Change Course
Monthly dispatches rooted in psychology, not persistence for persistence's sake-this one's about why we stay in jobs and career paths that no longer serve us simply because we've already invested years of time, effort, and energy. Explore how the sunk cost fallacy can keep us focused on what we've already sacrificed instead of what the future actually offers.
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