Comments on: The Sunk Cost Fallacy People relationship to money at a microeconomics level is fascinating. And I have some kind of mixed disgust and respect for people able to exploit our irrational behaviors. I once bought a coffee machine that was 30 euro more expensive than another one because it had a 50 euro rebate coupon that you had to stamp and mail to the manufacturer. I never sent the coupon. When wondering what happened, I realized the procedure was cumbersome but had a very long validity period, a beautifully crafted trap for procrastinators. People relationship to money at a microeconomics level is fascinating. And I have some kind of mixed disgust and respect for people able to exploit our irrational behaviors. I once bought a coffee machine that was 30 euro more expensive than another one because it had a 50 euro rebate coupon that you had to stamp and mail to the manufacturer. I never sent the coupon. When wondering what happened, I realized the procedure was cumbersome but had a very long validity period, a beautifully crafted trap for procrastinators.

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By: Fabrice Lété/2011/04/05/the-sunk-cost-fallacy/#comment-2539 Fabrice Lété Sun, 10 Apr 2011 14:22:01 +0000 Its very hard to explain the sunk cost fallacy to people. As a nice analogy, i knew a guy who spent something likie £70 on that horrible protein shake stuff. He hated it, but because he spent so much money on it he was determined to finish it all off. I tried to explain that he gains nothing from eating and and cannot recoup his investment, but that initial spending was enough to keep him drinking that awful stuff for the next month. You have to explain carefully and repeatedly that a) what has been spent cannot be recouperated and b) there is no value to the item itself. Some people find it very hard to let go. Its very hard to explain the sunk cost fallacy to people. As a nice analogy, i knew a guy who spent something likie £70 on that horrible protein shake stuff. He hated it, but because he spent so much money on it he was determined to finish it all off.

I tried to explain that he gains nothing from eating and and cannot recoup his investment, but that initial spending was enough to keep him drinking that awful stuff for the next month.

You have to explain carefully and repeatedly that a) what has been spent cannot be recouperated and b) there is no value to the item itself. Some people find it very hard to let go.

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By: tomp/2011/04/05/the-sunk-cost-fallacy/#comment-2490 tomp Fri, 08 Apr 2011 22:16:29 +0000 The opposite can happen with production costs vs. expected reward. I have seen expensive projects cancelled, possibly unnecessarily, because the already-spent cost is unlikely to be made back. But, of course, this sunk cost will not be made back by cancelling the project either, and so should not be considered. The only equation is: How much will it cost to finish & market versus expected sales. The opposite can happen with production costs vs. expected reward.

I have seen expensive projects cancelled, possibly unnecessarily, because the already-spent cost is unlikely to be made back. But, of course, this sunk cost will not be made back by cancelling the project either, and so should not be considered. The only equation is: How much will it cost to finish & market versus expected sales.

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By: Fabrice Lété/2011/04/05/the-sunk-cost-fallacy/#comment-2389 Fabrice Lété Wed, 06 Apr 2011 08:03:26 +0000 Some more food for thought can be found in these excellent posts: <a href="http://altdevblogaday.org/2011/03/17/built-here-no-thanks/" rel="nofollow">Built here? No, thanks by Bernat Muñoz</a> <a href="http://altdevblogaday.org/2011/03/19/how-not-to-get-things-done/" rel="nofollow">Database programming is fun! by Alex Evans</a> The "shall we keep/build our own tech?" question might be one of the most frequent ones in our industry, and it would be a simple one if only the answer was not different for every studio :) Some more food for thought can be found in these excellent posts:

Built here? No, thanks by Bernat Muñoz
Database programming is fun! by Alex Evans

The “shall we keep/build our own tech?” question might be one of the most frequent ones in our industry, and it would be a simple one if only the answer was not different for every studio :)

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By: tomp/2011/04/05/the-sunk-cost-fallacy/#comment-2370 tomp Tue, 05 Apr 2011 18:49:18 +0000 Second System Effect.

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By: martin/2011/04/05/the-sunk-cost-fallacy/#comment-2369 martin Tue, 05 Apr 2011 18:10:45 +0000