Have you fallen into the "sunk cost fallacy" myth?

May 22, 2022

Do you often make irrational choices because you don't want to lose the costs you've already spent, only to lose more as a result? Have you ever encountered: "The more stocks fall, the more reluctant to sell, because if you sell, you will lose money."; "I am not willing to let go when there is a big emotional problem, because there has been so much effort in the past."; " Even if the movie sucks, I refuse to leave the theater halfway, because I don’t want to lose money on movie tickets.” Part of the time we don’t want to lose what we have put in, and we end up losing more.

Recently, the decline of the US stock market has expanded. I believe that it is not an investor who has seen it more or less. Many investors and friends around me have spit a lot of bitterness. They all said something at the same time: "If I had known this, I should have stopped the loss at that price!"

They lost more at the moment because they didn't want to lose.

I have an old friend who has been dating my partner for nearly 7 years. We often heard him complain a lot about this relationship when we were at the brothers dinner. In fact, since the second year, they have had many problems and often complained about small things. Quarrel, and always complain that the other party doesn't understand you. When asked why he didn't choose to break up and start each other, he replied that he wanted to work hard to improve at first, but in the fifth year, he felt that he had spent so much youth, and he couldn't give up easily.

As a result, it took 7 years to solve it, and I don't know how long it will be wasted.

Just looking at the results, I'm sure everyone will think "why be so stupid?", but I'm pretty sure it's on you, and the results aren't that far off.

Why do we behave so irrationally?

It turns out that human beings are always pursuing some kind of apparent harmony and stability. Only with harmony and stability can we convey a sense of trust. Lack of stability can cause a terrible upsurge in the heart unconsciously. If we suddenly decide to call off a project that is halfway through, it can cause some kind of conflict in our hearts. We may even complain to ourselves, "If we knew this earlier, why bother!" However, continuing with this meaningless project can delay the face of the painful reality and put us in some kind of situation. Harmony and stability on the face.

Does that mean that we have to abandon the status quo in all these cases? There are many other good reasons to keep adding money to get something done, but don't get attached to this bad reason: you've already paid a lot and don't want to waste it! Rational decision making should mean that you can ignore the costs that have already been paid.

No matter what you've put in, the only thing you should really think about is the present, and the future you've decided!