SUNK-COST FALLACY 1)5)
"The human tendency to judge options according to the size of previous investments rather than the size of the expected return" (P. AYTON & H. ARKES, 1998, p.40)
The authors state: "Truly rational choices would be made only after weighing up future costs and benefits. Past costs and benefits are quite irrelevant" (Ibid)
To let oneself into the sunk-cost fallacy leads to "throw good money after bad", i.e. to transform a still available resource into into a highly probable loss.
This behavior can easily be observed in the stock market. It was also the irrationality that dominated the Vietnam war and led to this tremendous fiasco.
- 1) General information
- 2) Methodology or model
- 3) Epistemology, ontology and semantics
- 4) Human sciences
- 5) Discipline oriented
To cite this page, please use the following information:
Bertalanffy Center for the Study of Systems Science (2020). Title of the entry. In Charles François (Ed.), International Encyclopedia of Systems and Cybernetics (2). Retrieved from www.systemspedia.org/[full/url]
We thank the following partners for making the open access of this volume possible: