A common economic mistake made by people is the so-called sunk cost fallacy. In everyday life, there are certain cases where this fallacy should be avoided, but is often not. Here I write about certain situations where I did not avoid the fallacy.
- When walking somewhere, I sometimes find a path that I think could be a shortcut. After discovering that it’s actually a dead end, instead of retracing my steps and starting from the beginning, I tend to continue a fruitless search. Often, I move myself further and further from my target during that search.
- If I buy a product that breaks down, I often spend some time trying to repair the product instead of throwing it out and getting a new one. This is not in itself a bad thing in itself, but if an initial attempt at repair is fruitless, it’s probably better to give up. Instead, I find myself tinkering with the product to no avail for hours, partially because I don’t want the time I spent to go to waste.
- When solving problems, I am prone to spend too much time on a path that doesn’t work, and in the end the problem can’t be solved within the time limit. I do this because I feel that I would have wasted a lot of time if I don’t complete the problem the way I began to approach it.
For a similar post, see my earlier post on sampling bias.