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Ignore Sunk Costs (2009)

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Re: Ignore Sunk Costs (2009)

#91

Post by austhrow743 »

stblack wrote: post #77
paulpauper wrote: post #24

Seth Godin's success is proof that mediocrity pays if you're early. >Or say you make a mistake and go to the concert instead of selling (those seats are $500 seats now). But Bruce is sick and Manfred Mann is substituting for him. You don’t like him so much. But you paid $500 for the seats! Should you stay? Well then the concert would be cancelled and you would get a refund. In regard to the sign, if it were accidenta…

According to this post, dated August 8, 2019 and titled "Streaks", Seth has been blogging for 11-years straight without missing a day. His posts appear hours before I awake every day, despite us being in the same time zone. So your comment, "Seth Godin's success is proof that mediocrity pays if you're early", should be retracted. Edit: I forgot to include the link: https://seths.blog/2019/08/streaks/

>His posts appear hours before I awake every day, despite us being in the same time zone.

What does his publishing schedule have to do with anything? He's successful because he chose a time that's earlier in the day for your time zone than other bloggers do?

Re: Ignore Sunk Costs (2009)

#92

Post by jcriddle4 »

robotresearcher wrote: post #88
dvt wrote: post #9

The "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.

If the ticket is fully refundable then it is also not a sunk cost. The land example also has potentially the same issue if the land can be sold for the purchase price. If the land can be sold but at a 20% discount then the sunk cost is only the 20%.

Re: Ignore Sunk Costs (2009)

#93

Post by dvt »

DubiousPusher wrote: post #51
dvt wrote: post #28

Earlier quoted context omitted.

This is a good point and it was going to make it in my original post! I was going to say that the $1,000,000 price (as opposed to $100,000) tag on a piece of land will tend to be indicative of the value of the piece of land, assuming you weren't in a drunken stupor when you paid a million bucks for it. In other words, most decisions in life aren't bets made in a vacuum.

It is indicative of the value of the land but says very little about whether you should or in what way you should choose to develop either plot. The surrounding economy, zoning and geography will have far more to say about that.

This is true. However, suppose that all you knew about two plots of land was that one was bought for $1m and one was bought for $100k. Then, someone asks you which one you should develop.

Buying land isn't like betting on black. Land has a history, markets are (more or less) efficient, and buyers are usually rational. The sunken cost fallacy suggests the answer is a coin-toss, but in the real world, the correct answer would (usually) be the expensive plot.

Re: Ignore Sunk Costs (2009)

#94

Post by rumanator »

dvt wrote: post #9

The "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.…

> In Seth's concert example, this is particularly relevant: your spouse might be a huge Springsteen fan, for instance.

Your example misses the whole point of OP's demonstration of why sunk costs make no sense. OP's demonstration focuses on a single metric (cash), a single focused investment (time spent searching for the tickets) and a single critical change that exposes how the sunken cost fallacy negatively impacts decision-making (a random person offers you 10x the cash for your tickets).

The example illustrates that the amount of resources invested in the project in the past should not be a factor in the decision-making process because it leads to poor, irrational decisions. That's the core message of the sunken cost fallacy.

Your example fails to reproduce the problem because it switches the focus to an entirely different metric (utility) and frames the problem in a way that the new metric is actually negatively impacted by the change, thus the rationale decision is to not sell. That says nothing about the sunken cost fallacy because poor decisions are not alternatives to good decisions.

Re: Ignore Sunk Costs (2009)

#95

Post by DubiousPusher »

fogetti wrote: post #84
baddox wrote: post #39

Earlier 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

I have implied no false dichotomy. I haven't said one must accept either or. I've said simply one can account for the costs implied by the OP without rejecting the sunk cost falacy.

If it helps you to think in sunk costs that's probably fine. I don't care. My point was purely that one can incorporate the kinds of concerns the OP was proposing without rejecting the "sunk cost falacy".

Re: Ignore Sunk Costs (2009)

#96

Post by DubiousPusher »

lonelappde wrote: post #89
DubiousPusher wrote: post #42

Earlier quoted context omitted.

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

No. It's realizing your peers can induce a cost to you in the future whether they are acting from a rational PoV or not and incorporating that cost to your calculation.

Re: Ignore Sunk Costs (2009)

#97

Post by pdonis »

dvt wrote: post #9

The "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.…

> These are all technically "sunken costs"

No, they're not, they're additional factors to be considered in determining the value of the tickets to you, as compared to the value of the $500 you could get for them. The article ignores such factors, presumably for simplicity of exposition, but that doesn't mean they're not relevant. The correct rule is still to ignore sunk costs, because those are in the past; but the correct rule by no means says you should ignore relevant future impacts of your choice (like your spouse being upset because you sold the concert tickets) just because they aren't monetary.

Re: Ignore Sunk Costs (2009)

#98

Post by kwhitefoot »

bsder wrote: post #47
kwhitefoot wrote: post #15

Similar to the Concorde fallacy: https://dictionary.cambridge.org/us/dictionary/english/conco... .

While the Concorde may have been uneconomic, the engineer in me weeps at the loss of a little bit of coolness in the world.

> the engineer in me weeps at the loss of a little bit of coolness

Me too!

Re: Ignore Sunk Costs (2009)

#99

Post by egypturnash »

"Spend $250 on dinner and go buy better tickets for tomorrow night’s show."

Which you would probably have to spend another four hours looking for, if you could find any at all; Bruce is probably in town for a couple of days at most and tomorrow's show is most likely sold out. I guess your future time looking for those tickets is worth nothing too, despite the second paragraph urging you to only consider what may happen in the future when making a decision.

"Or say you make a mistake and go to the concert instead of selling (those seats are $500 seats now). But Bruce is sick and Manfred Mann is substituting for him. You don’t like him so much. But you paid $500 for the seats! Should you stay?"

Has this man ever gone to a concert in his entire life? The show's gonna be cancelled and you will be getting a refund.

Re: Ignore Sunk Costs (2009)

#100

Post by egypturnash »

stblack wrote: post #77
paulpauper wrote: post #24

Seth Godin's success is proof that mediocrity pays if you're early. >Or say you make a mistake and go to the concert instead of selling (those seats are $500 seats now). But Bruce is sick and Manfred Mann is substituting for him. You don’t like him so much. But you paid $500 for the seats! Should you stay? Well then the concert would be cancelled and you would get a refund. In regard to the sign, if it were accidenta…

According to this post, dated August 8, 2019 and titled "Streaks", Seth has been blogging for 11-years straight without missing a day. His posts appear hours before I awake every day, despite us being in the same time zone. So your comment, "Seth Godin's success is proof that mediocrity pays if you're early", should be retracted. Edit: I forgot to include the link: https://seths.blog/2019/08/streaks/

"His posts appear hours before I awake every day, despite us being in the same time zone."

Real blog software* lets you schedule posts. It's eminently possible that he writes these in batches and has his blog post them at midnight local time. He seems to be using Wordpress, which has multiple plugins out there to make this even easier to do.

Regularly keeping this up for eleven years is nothing to sneeze at but I am pretty sure that the likelyhood of him getting up at 3AM every morning and writing a post is nil.

* yes this means your static site generator is not Real Blog Software

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