Health & Wellness
When the sunk cost fallacy supersedes logic
May 5, 2022 By Isabelle Sauvé
The sunk cost fallacy is a well-known concept amongst economists and philosophers that we can all learn from. This notion implies a cost already incurred that cannot be recovered yet persists to influence our behaviour. If you’ve ever forced yourself to eat something you didn’t enjoy or kept an item simply because it came with a cost, you have experienced the sunk cost fallacy. The exclusive focus directed at the cost is based on irrational thinking since, regardless of what is done with the item in question, the money spent to acquire it is gone and it’s not feasible to recapture this loss.
Research studies suggest this type of illogical reasoning is deeply rooted in our instinctual aversion to loss, which was historically favourable for survival. Psychologist Daniel Kahneman explains that those who placed more urgency on eluding threats than on maximizing opportunities were more likely to pass on their genes. Consequently, over time the prospect of a loss has become a more powerful motivator and that of a possible gain. Loss tends to have a lingering effect on our minds. Studies have illustrated subjects are more deeply affected by the loss of $20 than by the gain of the same amount. This survival element continues to be the driving force behind our susceptibility to being culled by the sunk cost fallacy.
Dr. Christopher Olivola of Carnegie Mellon University conducted a series of thought-provoking studies that further exemplify the sunk cost fallacy. In one study, research participants faced a hypothetical scenario: two getaway vacations had inadvertently been reserved for the identical dates; and therefore, participants were obligated to select only one. The first possibility was for a trip to Cancun at a cost of $200 while the second option was for a trip to Montreal at a cost of $800. Interestingly, significantly more participants chose the more expensive trip to Montreal despite ultimately admitting a preference of Cancun, the least expensive destination.
The impact of the sunk cost fallacy can be relatively insignificant in principle such as overeating food or keeping a drawer of unworn clothing, but real and dire consequences are also plausible.
The more employees perceive themselves invested and rewarded for their work, the more they are likely to continue contributing to the organization.
The more money, time, energy or resources that are invested into something, the more difficult it frequently becomes to relinquish it. The concept also applies to professional and personal matters. For instance, the more one has devoted to a relationship, the more challenging it often becomes to abandon it—even if toxic. Persevering in a continued failed effort is commonly merely an attempt to correct the cognitive dissonance of giving to something and failing to receive the expected return on investment.
The game Farmville gained instant fame and revolutionized a new genre of gaming by capitalizing on the concept of sunk cost fallacy. It achieved this by rewarding players for “working” on a virtual farm and “feeding” the simulated animals as well as by exploiting loss aversion by depleting players of their investments when they neglect their computer-generated farmstead. Some players have even become so engrossed and concerned with preventing a loss that they respond to a wake-up alarm to “tend” to their virtual farm in the middle of the night.
Law enforcement agencies are not immune to the sunk cost fallacy. Despite the considerable training and experience law enforcement personnel gain analyzing complex situations, problem solving, remaining impartial and applying sound judgement; humans are not purely rational decision makers. We are all influenced by our experiences, environments and emotions. We can readily make suboptimal decisions when emotions, particularly acute ones, are at play. Taking a step back when heavily involved in an endeavour or seeking the perspective of an outside source can abet emotion-based misjudgments such as those connected to the sunk cost fallacy. Law enforcement agencies are undoubtedly a tight knit community that can benefit from the perspective of external professionals. An independent advisor may more swiftly detect a problematic initiative than those deeply entrenched in its development and delivery. Law enforcement agencies can also benefit from periodic cost-benefit analyses of their various programs.
From a recruitment and retention point of view, law enforcement agencies can garner ample knowledge from these concepts. For instance, the more employees perceive themselves invested and rewarded for their work, the more they are likely to continue contributing to the organization. Being vigilant for the sunk cost fallacy can promote the prevention and avoidance of the most inimical effects and permit us to be a better executive of our resources.
Isabelle Sauvé has a MA in psychology and is a PhD candidate. She is also an ultramarathon/endurance athlete and the Racing the Planet/4 Deserts 2018 Series winner as well as a Guinness World record holder. She can be contacted at: email@example.com.
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