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Suppose you have bought movie tickets for an upcoming movie which you are eagerly waiting for since a month. A day before your plan, you get to know really bad reviews for the film. While you are thinking about the reviews, you see a book in your book shelf. You had ordered it a month back but didn’t really get time to open it. You will finally get some relaxed time tomorrow to read that inviting book if you don’t go to the film. What do you choose?
Sunk cost fallacy is the psychological phenomenon which compels people to make a choice based on their past investment in something, rather than the future benefits. We do many things in our life because we have invested so much in it, that not doing it feels like a big loss. But in fact, continuing doing it is what makes bigger losses to us, because we keep investing more and more resources in a lost cause.
Just because you have spent a lot of your time in doing something, doesn’t mean you keep doing it. Just because you have invested a lot of money in a business, doesn’t mean you keep adding more money to it to extract nothing. Just because you have put a lot of your emotions in a person, doesn’t mean you keep trying to make that person a part of your life. What really matters is whether your current decision will give you benefits in future.
Past investments are deceiving. We try to rip the returns for past investment by avoiding to invest resources in a better cause which can yield much better benefits. Past investment is what something’s long gone. You don’t have it now.
It would be a wise choice to avoid the bad film and spend time reading really good book. Invested money is gone. Now don’t ruin the precious time to recover lost money!