Sunk Cost Fallicy and Irrational Decisions

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The sink cost fallicy is a false belief that we should pursue a goal based upon the investment we have made in the past. An investment of time or money or both can away our decision making to give more weight to the current course we are on, rather than to the right or logical course of action. Such a mindset can lead us to making a regrettable choice that can harm us.

Time changes our circumstances, and the belief that because we made an investment of time or money that we should continue our pursuit of a goal can lead us to ruin. Logic dictates that our position on our current situation should change with time, and investments of time and money from the past illogically impact our thought process. Humans are often far from objective and logical, so it goes without saying that we are vulnerable to the sunk cost fallicy mindset.

To avoid the sunk cost fallicy, we need to discount past investments and look at the current situation objectively. Does it make sense to stay on our current course, or do we need to course correct? We need to be honest with ourselves and ask if our decisions are in our best interest or in the best interest of a long time investment with a sunk cost. Objectivity and grounding can be acquired through conversations with friend and trusted confidants. Seeking an unbiased opinion is a godsend for avoiding the sunk cost fallicy.

The next.time you consider remaining in a toxic relationship because you spent years in it or keeping your investment position because of the money you put into it, consider the sunk cost fallicy. It could help save your money, time and sanity to do so.