What are the sunk cost fallacy examples? Are you negatively affected and don’t realize it? When we focus solely on past costs rather than present and future benefits the sunk cost fallacy may be the reason.
The sunk cost fallacy examples are full effect When our behavior is a result of previously invested resources rather than present and future benefits.
The sunk cost fallacy is at work when we overeat until the verge of becoming ill at an all-you-can-eat buffet. You believe you paid for it but as a result, you did not enjoy it because of feeling ill.
When our behavior is a result of previously invested resources rather than present and future benefits the sunk cost fallacy may be in full effect. The sunk cost fallacy is at work when we overeat at an all-you-can-eat buffet.
You believe you paid for it but as a result, you did not enjoy it feeling ill from the overindulgence.
Why do you believe we stay in bad relationships or continue to stay in careers we hate? In many cases, the sunk cost fallacy is at work. The thought of correcting unhappiness never even crosses our minds. We just suffer year after year after year.
The false belief that ending the pain now will waste what we have already sunk (invested) into a situation. Years of pain and suffering could easily be avoided. Just realizing by stopping the bleeding now can result in a pain-free greater gain for the future.
Large retail stores use the sunk cost fallacy examples against us all of the time. Buy one and get the other at half the price. You are already paying for it and we believe we will be losing out if we don’t get the other one for half price.
Losing out on what, I don’t know. The retailer is doing us a favor. Right? They did not trick us into buying two and actually paying more than the cost of the two. Right?
The result of sunk cost fallacy examples is one of the reasons why our homes are filled with so much junk we don’t want or need. We just buy it because we believe it makes sense.
Not because we actually want or need it. Sometimes the minute we get home we ask ourselves ” why did I buy this”?
Sunk Cost Fallacy Examples and Survival
For human beings, memory and recall are some of our greatest survival tools. This is known as Adaptive memory. It is extremely beneficial to survival to remember where predators and food are more likely to be.
Those individuals that did not acquire that skill were obviously at a disadvantage and removed from the gene pool at higher rates.
As a result, human beings evolved more towards avoiding threats than maximizing opportunity. A bird in the hand is worth more than two in the bush as far as human evolution is concerned. Really?
The prospect of loss motivates us more than the possibility of gain. The sunk cost fallacy seems to be woven into our DNA. How many birds would have to be in the bush before we regularly risk running into Lions to gain the extra meals?
Are we more risk and loss averse than reasonable? Do we think more about what we have to lose than the possibility of enormous gain when factoring in any exchange? That seems to be the case. Human beings tend not to treat loss and gain equally.
A loss is more painful and memorable than the joy of possible gain. Witnessing a tribe member being devoured by Lions was much more painful and memorable than years of feasting on meals the extra birds would provide.
The risk of loss aversion becomes real but can also be irrational.
For example, many people who play The State Lottery only play when the Jackpot is at record highs. In their minds winning a few million is not worth the risk of almost certainly losing a few dollars.
The gain must be many times greater than the loss to be worth the risk in the mind of most lottery players.
The odds of winning are the same whether the Jackpot is 2 million or 800 million. The odds of having to share the Jack Pot actually go up the more people play. That means the odds of having to share large Jack Pots go up.
This actually would yield fewer winnings for high jackpots, not more as lottery players believe. The person living from paycheck to paycheck can use 20 million dollars just as much as they can use 800 million.
The numbers work out the same but less adverse human beings don’t see it that way.
The person living from paycheck to paycheck can use 20 million dollars just as much as they can use 800 million. The numbers work out the same but less adverse human beings don’t see it that way.
The sunk loss fallacy works the same way in the human mind. The risk of loss past cost outweighs the possibility of gain and causes a person not to act more likely to ensure a loss.
Hoping a situation will get better is almost always a losing strategy.
Sunk Loss Fallacy May Be Stealing Your Happiness
We need to realize that once the anchor of the sunk loss fallacy is lifted we gain the possibility to sail off into the sunset toward better results and more happiness. We try and if what we tried does not work cut your losses and try something else.
To avoid the possibility of losing the past cost we may consider continuing:
- Destructive relationships, personal and professional.
- To watch a terrible movie, play, or musical performance instead of ending the pain.
- A gym membership or similar obligation when it is obviously not beneficial.
- A College major when you realize you would be happier studying something else.
- To do something to make another person happy neglecting your happiness.
Do you allow the fear of losing past costs to pressure you to continue participating in a less-than-ideal situation? There are many ways we may allow the sunk cost fallacy examples to steal our happiness.
Just allowing that situation to exist creates unhappiness in our lives. Just the thought of the possibility of loss without attempting to correct it constantly lingers in our minds. This can have a negative effect on our ability to be happy.
On a larger scale, sunk cost fallacy examples can result in wars and allow us to support failed political policies.
Avoid The Negative Effects Of The Sunk Cost Fallacy
When something is not going well it may be time for a change. Change can be scary but is often necessary. Cutting losses for clearer skies are practical. When you feel the irrational fear of loss creeping in, just slow down.
I like to practice what I call mindful breathing. It is my way of meditating.
I take a few slow deep breaths and clear my mind of all negative thoughts and feelings. I usually silently count to 3 or 5. This helps me think more clearly and make decisions purely on merit.
Ask yourself a few questions to avoid allowing the sunk cost fallacy to paralyze you into inaction.
As a being Minimalist, I ask myself many of these questions before making a purchase.
- Would you make the same decision again? ( Get involved in a situation, relationship, or obligation)
- If it were lost would I replace it?
- Would you miss it if it ended?
- If it ended would I renew it?
- Am I happy with it?
- Can I improve upon it?
- Does it negatively affect my life?
- Does it add value to my life?
Depending on my answers to the questions I feel more able to make a good decision. I am less likely to allow the sunk cost fallacy to keep me trapped in a poor decision or propel me into making a poor choice.
Has the sunk cost fallacy ever played a negative effect on your life? Have you realized other ways to combat the sunk loss fallacy? Please comment below.