Robert Todd Carroll
SkepDic.com
Click to order from Amazon
|
 |
sunk-cost fallacy
When one makes a hopeless investment, one sometimes reasons: I can’t
stop now, otherwise what I’ve invested so far will be lost. This is
true, of course, but irrelevant to whether one should continue to invest in
the project. Everything one has invested is lost regardless. If there is no
hope for success in the future from the investment, then the fact that one
has already lost a bundle should lead one to the conclusion that the
rational thing to do is to withdraw from the project.
To continue to invest in a
hopeless project is irrational. Such behavior may be a pathetic attempt to
delay having to face the consequences of one's poor judgment. The
irrationality is a way to save face, to appear to be knowledgeable, when in
fact one is acting like an idiot. For example, it is now known that Lyndon
Johnson kept committing thousands and thousands of U.S. soldiers to Vietnam
after he had determined that the cause was hopeless and that the U.S.
would not win the war (McMaster 1998: 309). George W. Bush continues to argue that
thousands more soldiers and billions more dollars be committed to the war on
Iraq, despite the fact that the majority of his
generals, his
senators and
congressmen, and
the
American public do not think the U.S. should invest any more in that
war. This fallacy is also sometimes referred
to as the Concorde fallacy, after the method of funding the
supersonic transport jet jointly created by the governments of France and
Britain. Despite the fact that the Concorde is beautiful and as safe as any
other jet transport, it was very costly to produce and suffered some major
marketing problems. There weren't many orders for the plane. Even though it
was apparent there was no way this machine would make anybody any money,
France and England kept investing deeper and deeper on the grounds
that they had already invested a lot of money. The
crash of Air
France Flight 4590 on July 25, 2000, that killed 113 people—even though it
was due to a freak
accident and not a design flaw—put an end to any hope that anyone might
have had for further
development of the Concorde. further reading
reader comments
Arkes, H. R., & Ayton, P. (1999). The sunk cost and Concorde effects: Are
humans less rational than lower animals? Psychological Bulletin, 125,
591-600.
Belsky, Gary and Thomas Gilovich. Why Smart People Make Big Money
Mistakes-And How to Correct Them: Lessons from the New Science of Behavioral
Economics (Fireside, 2000).
Dawes,Robyn M. Everyday Irrationality : How Pseudo Scientists, Lunatics,
and the Rest of Us Systematically Fail to Think Rationally (Westview
Press, 2001).
McMaster, H. R. (1998). Dereliction of Duty: Johnson, McNamara, the Joint
Chiefs of Staff, and the Lies That Led to Vietnam. Harper Perennial.
|
|
substance abuse treatment