Nick Szabo comes to a similar conclusion:
http://unenumerated.blogspot.com/2012/08/proxy-measures-sunk...
Ignore Sunk Costs (2009)
81–90 of 101 posts
Re: Ignore Sunk Costs (2009)
#82Work sunk costs: I can drop it, no problem.
Personal sink costs: I can’t do it. I know I should ignore it, but I cannot.
Re: Ignore Sunk Costs (2009)
#83Earlier quoted context omitted.
You don't need to invoke social narratives and consistent behaviors to justify honoring sunk costs. Sunk costs are often a predictor of a developed position. For example, you spend 20 years in advancing in field and then worry that you might not like it that much anymore. If you avoid leaving the field purely because of the sunk time, you are honoring a sunk cost. If you avoid leaving the field because your 20 years…
In this case you're merely using history to make a relevant choice about the future. You're not honoring the sunk cost because of the investment, you're just using the lessons your learnt while making this investment.
You are basically just playing with the words, but you also seem to contradict yourself:
> you're just using the lessons your learnt while making this investment
That's exactly what honoring sunk costs mean. Making the investment means the cost factor. And using the lessons your learnt means honoring.
Re: Ignore Sunk Costs (2009)
#84Earlier quoted context omitted.
It seems to me like one simply should incorporate social costs into the calculation. If your wife was looking forward to the concert and doesn't give one whit about modern economic theories like sunk cost, her disappoinment at not following through with attending the concert tonight is not a sunk cost, that's a future cost which you should weigh.
Yep, that’s a future cost of the decision to not go to the concert, not a sunken cost like the cost of the ticket. It’s not relevant to the discussion of sunken costs.
The point is the same cost can be sunken and future cost too. It's not binary, and your implied false dichotomy (either a future cost or a sunken cost) is wrong
Re: Ignore Sunk Costs (2009)
#85Earlier quoted context omitted.
Yep, that’s a future cost of the decision to not go to the concert, not a sunken cost like the cost of the ticket. It’s not relevant to the discussion of sunken costs.
The point is the same cost can be sunken and future cost too. It's not binary, and your implied false dichotomy (either a future cost or a sunken cost) is wrong
The dichotomy does seem to apply perfectly well. The cost of the ticket is sunken. The social cost of skipping the concert is not.
Re: Ignore Sunk Costs (2009)
#86Earlier quoted context omitted.
mistake is not in holding strong hand way too long. mistake is in not playing it.
you get called and the flop is shit, what do you do?
going against another strong hand and loosing is one thing - slow rolling strong hand and being outplayed by weaker hand is another (and totally deserved IHMO).
Re: Ignore Sunk Costs (2009)
#87i strongly disagree with the author. you cant ignore sunk costs. For example, in the stock market the majority of active retail traders (>90%) get wiped out within 3 years. they continue to dump money into the market, ignoring losses (sunk costs), hoping that the next trade will help recover the losses, and then the next trade, the next ... etc. at some point one has to stop "bleeding" and re-evaluate the approach be…
The decade long bull market has been really good to a lot of active retail traders.
in the long run >95% of active retail traders loose money - bull market or not.
Re: Ignore Sunk Costs (2009)
#88The "argument from waste," as economists call it, makes sense from a business and investment standpoint, but I'm a staunch believer that in every-day decision making (barring Vegas trips) it isn't usually a fallacy [1]. The paper cited is abstract (and borrows from Nozick, who also wrote a criticism of the sunken cost fallacy in the early 90s). But the conclusion is: > Sometimes it is reasonable to honor sunk costs.…
Pissing off your spouse is a pertinent new cost of bailing from the concert, not a sunk cost. The ticket price is sunk, because you paid it in the past and can not change it.
Re: Ignore Sunk Costs (2009)
#89Earlier quoted context omitted.
I think you're conflating what the paper author calls "binding" and "betting" -- "binding-type" decisions (like the one in the concert example) seem to be candidates for honoring sunken costs. Betting, on the other hand, does not.
No. I understand exactly what the author means. The paper is quite simple and clear. I just think it's a meaningless distinction. Rather than try to create a two tiered decision making process where some decisions should include sunk costs and others shouldn't, you should have a single tiered system that includes social costs. You don't need to think in sunk cost terms to value plausible deniability. You should view…
That's being victim of your peers falling for the sunk cost fallacy
Re: Ignore Sunk Costs (2009)
#90Earlier quoted context omitted.
Yep, that’s a future cost of the decision to not go to the concert, not a sunken cost like the cost of the ticket. It’s not relevant to the discussion of sunken costs.
The point is the same cost can be sunken and future cost too. It's not binary, and your implied false dichotomy (either a future cost or a sunken cost) is wrong
imagine every instant in your life is an infinitesimally small point on a timeline (or every millisecond if something concrete is easier). the present is t0.
an event occurs (buy ticket) at tX. according to "ignore sunk costs", at tX+delta you should annihilate all influence from any event at tX or before. therefore that you have a concert ticket is, in a weird way, almost immaterial. it enables a future decision (to "freely" go to a concert, as you would any other activity) but, my interpretation is that you only have present and future after every instant moment.
you may say: well what about eliminating future opportunities? e.g. i spent my last $250 on concert ticket so can't go to hawaii. that is in part of a matrix i would call "regret" or counterfactuals (not sure if there's an economic/scientific term here), which involves thinking about how past decisions affected future ones.