In simple terms, a sunk cost is an investment or payment that a person can never recover. Therefore, sunk cost fallacy is the human tendency to follow through with an endeavor, significantly if they have invested or paid money to it, regardless of whether the costs outweigh the benefits (McRaney). A sunk cost fallacy is caused by an understanding of a loss growing and lingering in a person’s mind, which becomes more significant in their history than when first felt. The danger of the habit of clinging to past mistakes when making decisions about the future makes people run the risk of being derailed by sunk costs. The best action to counteract the tendency to cling to a sunk-cost habit is by detaching the past from the decision-making process (McRaney). In other words, people should learn to make their future decisions by negating their past loss feelings in how they make their choices.
People can become more aware of the fallacy by predicting their future based on reflection and regrets, which makes them admit when their efforts are in vain. Accepting when the truth hurts is essential to minimize the effects associated with the fallacy. As such, people should learn to let go of their habits that incorporate past lost feelings, their desire to preserve, and their will to stay the course (McRaney). That differentiates children and animals from adults since the former do not fall victim to sunk cost fallacy. For individuals to directly manage themselves away from the fallacy, they must learn to differentiate their better judgment from psychological burden (McRaney). Although that might be difficult to achieve, it helps people change their exclusivity and nobility to human bias.
McRaney, David. “The Sunk Cost Fallacy.” You Are Not So Smart, 2011.