Sunken Cost Fallacy

Discussions about how much ‘stuff’ we keep for the sake of it, both physically and mentally started me reflecting and researching why people do like to hold onto things.

I came across something called the ‘sunken cost fallacy’ which is about investments that justify further expenditure. They don’t need to be monetary.  It could be time, energy or emotion. The thing is when we’ve invested heavily, we allow our personal attachments to cloud our judgement which means our decision making is driven by emotion rather than logic.

Think of that expensive piece of clothing in your wardrobe. Worn only once but it remains because of that price tag. Or the business idea, in which you’ve invested money and people but you’ve missed the market. Instead of adapting it or moving on, you keep going back to the same idea in the hope you missed something?

I’m hearing for many, the pandemic has allowed some decluttering. It has given you the opportunity to re-evaluate what is important and, no matter what your sunken cost is, to move. But what if you’re being driven by emotion rather than logic? What can you do to change your perspective? If it was a friend in the same position what questions might you be asking them?