Talk:Sunk cost

message: Use of the second person ("you") is generally discouraged as per Wikipedia:Manual_of_Style#Avoid_the_second_person. Ewlyahoocom 17:02, 31 January 2006 (UTC)
replies: text: Mischief Managed Brian Sayrs 00:31, 15 April 2006 (UTC)
thread_title:  Too much Second Person 

message: How else can you explain the troop buildups in Vietnam and now Iraq?  Just because you bought the ticket to the wrong movie doesn't mean you have to go...  12.41.40.20 21:26, 11 January 2007 (UTC)
thread_title: Sunk cost fallacy and War

message: Please look at the information in Bygones principle and see if you think it should be merged here. The merge from Bygones principle was actually suggested on that page in 2006. --SueHay 01:33, 10 March 2007 (UTC)
replies: text: They seem to be similar enough to support a merge to me at least. --86.128.255.115 13:51, 5 June 2007 (UTC)
thread_title: Merge from bygones principle to here

message: There is a fundamental fallacy in the article. It directly compares two projects, one costing $30 million and another one costing $5 million and claims that it is "obviously" rational to choose the latter at the $20 million mark, completely failing to consider anything but the cost - namely the fact that a $5 million plant is likely to have a lot lower capacity and output than the $30 million plant would, which means that it might not be sufficient for the required operation - and that by putting in the remaining $10 million would probably gain you a plant that produces well more than double compared to the option that at that point will cost 50 %, so it is relatively cheaper! It is definitely a logic fallacy to draw that kind of a direct conclusion based on only one variable. --84.250.188.136 (talk) 00:41, 18 June 2008 (UTC)
thread_title:  Huge Error 

message: This is not an example of sunk cost because utilities are regulated and their rates are based on how much they spent.
 The more they spend the higher the rate to the consumer.
 This was one reason the telephone monopoly, ATT, was broken up,
they were spending billions of dollars wiring new houses so they could get higher rates,
but much of the wiring wasn't used by consumers.
 67.150.104.16 (talk) 06:58, 9 August 2010 (UTC)
thread_title:  Nuclear plant example does not follow 

message: The proposal is to merge the article Sunk cost dilemma to here.
The situation is confusing (at least for me). This article (Sunk costs), in the section The sunk cost dilemma, states: "The sunk cost dilemma with its sequence of good decisions should not be confused with the sunk cost fallacy, where a misconception of sunk costs can lead to bad decisions." However, what is described in Sunk cost dilemma (except for the first sentence) is precisely the sunk cost fallacy in which a sequence of actually bad decisions leads to "disaster".
What is further confusing is that usually the tendency to favour the bad decisions is ascribed to the (irrational) loss aversion of the sunk costs, while the Lehmann model, at least as described in Sunk cost dilemma, ignores sunk costs. Based on a cursory examination, the Lehmann model does not pass the notability test and should therefore probably not be included in the merge.
A possible alternative to this merge is to spin off an article Sunk cost fallacy into which Sunk cost dilemma is merged. Google scholar gives me 471 hits for "sunk cost fallacy", so there has to be potential.  --Lambiam 07:53, 11 August 2009 (UTC)
replies: text: If it helps, the same person who wrote the section called "sunk cost dilemma" in this article also started the article with that title.  I'm not terribly versed in this area, but my understanding was that the two terms ("fallacy" and "dilemma") referred to the same thing, so I'm in favor of a merger or redirect.  Sisterdetestai (talk) 04:15, 10 November 2009 (UTC)

text: The sunk cost dilemma and sunk cost fallacy are definitely two separate, though related, concepts. The sunk cost fallacy is mistakenly taking into account sunk costs when making a decision. The sunk cost dilemma results from the opposite: when sunk costs are ignored in decision-making, resulting in a series of decisions which are correct at the time they are made, but ultimately result in an adverse outcome. The dilemma occurs when the benefit is back-loaded, but the costs accrue incrementally. At each decision point, if you ignore the sunk costs, the future benefit will outweigh the future costs. However, this can result in the cumulative costs outweighing the cumulative benefit. Hence the dilemma: even if you make good decisions the entire way by ignoring sunk costs, you might still lose. The sunk cost dilemma should have it's own page, since there's a whole range of information that can be written about it, and because it's one of the main reasons for cost overruns in projects. 98.94.134.88 (talk) 17:54, 24 September 2010 (UTC)

text: I support merging the sunk cost dilemma and  sunk cost fallacy  into this article with a redirect from the two pages to the sunk cost page.
--Mjjzf (talk) 10:35, 31 December 2011 (UTC)
thread_title:  Merge proposal 

message: "sunk costs are retrospective (past) costs which have already been incurred and cannot be recovered."
A sunk cost is an expenditures that has been "made or committed to in the past and is now irreversible."Goodwin, N, Nelson, J; Ackerman, F & Weissskopf, T: Microeconomics in Context 2d ed. page 202. Sharpe 2009 For example, a firm builds a plant using borrowed money. Payments required under the promissory note would be sunk costs. Jgard5000 (talk) 19:54, 30 October 2009 (UTC)
thread_title: Not limited to retrospective costs

message: The "Loss aversion and the sunk cost fallacy" section refers to "the above example involving a non-refundable movie ticket", but the example above in the 4th paragraph (right before the TOC and "Description" paragraph) is out of sync. I'm guessing the example used to state something like this: a ticket was purchased to a movie the buyer didn't really want to see, but ticket prices went up, so the buyer felt like they had to see the movie anyway, hence: throwing good money after bad.  —Preceding unsigned comment added by Meonkeys (talk • contribs) 20:44, 19 May 2011 (UTC)
replies: text: Somehow the "above example" was changed to a baseball game ticket (which seems rather US-centric to me).  I adapted the later section a bit, but really they should be brought into sync in a more generic manner ("event ticket"?) that can apply to anyone. Huw Powell (talk) 20:23, 27 August 2016 (UTC)

text: Same thoughts. What's up with that section referring to some example which doesn't seem to be there? •nix• 17:59, 4 September 2016 (UTC)
thread_title:  Omission: non-refundable movie ticket example 

message: The article has a bad example of how to make decisions by disregarding sunk costs: "The sunk cost is distinct from economic loss. For example, when a car is purchased, it can subsequently be resold; however, it will probably not be resold for the original purchase price. The economic loss is the difference (including transaction costs). The sum originally paid should not affect any rational future decision-making about the car, regardless of the resale value: if the owner can derive more value from selling the car than not selling it, then it should be sold." 
The reason it's bad is that only works if you are not buying another car. If you are buying another car, then you cannot just consider the ownership cost vs. the resale cost -- you also have to consider how much many you'll sink into a new purchase. For example, imagine that:
1. You have to pay an estimated $500 in upkeep to own your car over the next year.
2. You could sell your car for $4000.
3. You have to sink $5000 into the purchase of a car (let's say for taxes and dealership markup that you can't recoup when you sell). 
According to the bad example on this page, you should sell your car because $4000 re-sale is greater than $500 to maintain ownership.
But obviously, if you have to buy another car, you'd be better off keeping the one you have in order to avoid the future sunk costs.
In other words: it's not just your currently sunk costs that you have to consider. Future sunk costs matter, too.
64.134.173.63 (talk) 03:30, 2 August 2012 (UTC)
replies: text: You've already spent the money. You can wish all you want that you hadn't spent it, but you did, and it's never coming back. Unless you have a time machine, whatever effect your having spent it will have on your future expenditures, resources, and activities has already been incorporated. That's the whole point of the concept. Largoplazo (talk) 12:36, 28 April 2018 (UTC)
thread_title:  Bad Example 

message: In "Description", the author writes "This generally shows a lack of planning, and often, intelligence."  This statement is pejorative to economic actors (i.e, people) because it is most likely untrue;  if it were defensible, I wouldn't object to it but I would call for citations.  The article already refers to rationality, which is the core issue here;  it's known, and I'm sure someone else can supply the citations, that primates act in emotional, irrational, and context-dependent ways;  planning and intelligence are not at issue.  — Preceding unsigned comment added by 70.188.135.18 (talk) 01:12, 6 August 2012 (UTC)
thread_title:  Ad Hominem is inappropriate 

message: 1. A person wants to buy one 20oz soda for $1.69, but the store has a sale: 2 for $3.00. The buyer perceives 19¢ as a waste because they're "getting a soda anyways", and possibly factoring in the second 19¢ as a "deal" they don't want to pass up. This might count because the buyer is counting the first soda as "sunk cost", and getting two as a potential saving of money.
2. A person opens up a package of food by accident, but eats it anyways "so it won't go stale". May also count for a mixture of this and the above: buying a bigger package of food because it costs less in total. But then again, this may be tainted too much by the fact that the food became more tempting upon opening the bag.
MoogleEarth (talk) 16:41, 19 February 2013 (UTC)
thread_title:  Do these examples count? And if not, what do they count as? 

message: I understand the concept of sunk costs but think the examples given, with the movie ticket and the concert ticket, are not that good, because they don't involve "throwing good money after bad", at least not explicitly/prominently. You might have to spend some money to go to the movie/concert, but this should be negligible, and isn't mentioned in the examples anyway. What is mentioned is your mood and the weather at the time you have to go, which don't involve money. Most people would also not work instead of going to the movies/concerts, so they wouldn't gain any money by not going. Time is money, sure, and I value my free time, but I'm not putting a monetary value in front of each hour, are you ? I believe an example should clearly include spending more money if you go through, like with the Concorde that is also mentioned in the article. But something simpler because Concorde is a very complex issue involving national pride and things like that, impossible to put a monetary value in front of such things. Aesma (talk) 13:46, 22 November 2014 (UTC)
replies: text: Not all costs are monetary.  — Preceding unsigned comment added by 2602:306:CEB0:9EA0:445C:D3DA:36AC:8913 (talk) 20:32, 26 April 2016 (UTC)
thread_title:  Better examples needed 

message: Hello fellow Wikipedians,
I have just added archive links to  on Sunk costs. Please take a moment to review my edit. If necessary, add  after the link to keep me from modifying it. Alternatively, you can add  to keep me off the page altogether. I made the following changes:
*Added archive https://web.archive.org/20150806002003/http://www.suemialon.com/research/RevisedSunkCostsMatterApril2007.pdf to http://www.suemialon.com/research/RevisedSunkCostsMatterApril2007.pdf
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thread_title:  External links modified 

message: Dr. Friedman has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:
We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.
Dr. Friedman has published scholarly research which seems to be relevant to this Wikipedia article:
*Reference : Daniel Friedman & Kai Pommerenke & Rajan Lukose & Garret Milam & Bernardo A. Huberman, 2004. "Searching for the Sunk Cost Fallacy," Experimental 0407007, EconWPA.
ExpertIdeasBot (talk) 16:59, 19 May 2016 (UTC)
thread_title:  Dr. Friedman's comment on this article 

message: The Preston McAfee article linked in the sunk cost fallacy section is far more of a demonstration of McAfee's failure to understand the nature of the sunk cost fallacy (which obviously would include opportunity costs - duh) than it is a rebuttal. I'd recommend removing it as it clouds understanding of the fallacy by encouraging people to commit the same misunderstanding.  — Preceding unsigned comment added by 67.168.176.62 (talk) 00:39, 26 June 2016 (UTC)
thread_title:  Remove McAffee reference? 

message: Dr. Altug has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:
We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.
We believe Dr. Altug has expertise on the topic of this article, since he has published relevant scholarly research:
*Reference : Sumru G. Altug & Fanny S. Demers & Michel Demers, 2007. "Political Risk and Irreversible Investment," Koc University-TUSIAD Economic Research Forum Working Papers 0707, Koc University-TUSIAD Economic Research Forum.
ExpertIdeasBot (talk) 20:34, 1 July 2016 (UTC)
thread_title:  Dr. Altug's comment on this article 

message: Sunk cost dilemma
The economic approach that sunk costs should not be considered when decisions are being made can lead to a situation where the sum of a number of good decisions can lead to one big disaster. This dilemma can be described using a game theory approach for 1-player games.
The sunk cost dilemma with its sequence of good decisions should not be confused with the sunk cost fallacy, where a misconception of sunk costs can lead to bad decisions.http://www.skepdic.com/sunkcost.html Sunk-cost fallacy occurs when people make decisions about a current situation based on what they have previously invested in the situation. For example, spending $100 on a concert and on the day you find that it’s cold and rainy. You feel that if you don’t go you would’ve wasted the money and the time you spent in line to get that ticket and feel obligated to follow through even if you don’t want to.
:::I removed the above for a couple of reasons.  One is that it fails to communicate any information.  Another is the second-person voice.  Yet another is the rather poor example - one could brave the rain and enjoy the concert, for an overall benefit. Huw Powell (talk) 20:28, 27 August 2016 (UTC)
thread_title:  Cut section from article 

message: I don't know why this was moved from "Sunk cost" to "Sunk costs" in 2008. The person who did so didn't explain it beyond "correct lemma", whatever that means. Wikipedia practice is to place articles under the singular title. —Largo Plazo (talk) 15:05, 12 March 2010 (UTC)
replies: text: The plural form does nothing for me.  I have a feeling that this is a mass noun plural, meaning 'types' of sunk cost (each of which is singular) such as capital and reputation, which is probably useful when teaching Economics 101 from 10,000 feet.  However, each component is, separately, a sunk cost and if you aren't busy leaping past the straightforward definition into the counter-intuitive nature of human behaviour (as arrogantly idealized), it's almost certainly the better term (and page title). — MaxEnt 17:57, 20 December 2016 (UTC)
replies: text: I went ahead and did it. Largoplazo (talk) 20:12, 20 December 2016 (UTC)
thread_title:  Proposal - move back to "Sunk cost" 

message: If a certain person (of type "strong personality") gains sway over an initiative by saying "I known why I'm doing, I've had success before" (a strain of argument from authority) there's going to be a pretty stiff resistance to reversing course, if the reversal pikes the social calculus of dear leader's original leadership gambit.  If a person is heavily invested in argument from authority, the only acceptable outcome is one that buttresses "I've had success before" with the subtext "doing it entirely my way".  
Imagine the postmortem discussion: "we put forward a plan which we felt was based on logical analysis, and you basically said 'what do you know?  I've got experience in these matters", then you took over (without having actually persuaded your key opposition of the merits of your proposal), and sure enough, three months later, it's all falling apart (pretty much exactly as we predicted it would), then you change course and adopt the rational plan your adversaries had put forward right from the outset, and now here you are, attempting to claim credit for the successful outcome—which actually took three months longer than it would have had we been in charge from the outset—and here you are, polishing up your long track record of 'father knows best'.  Well, we think this stinks, and you better believe we're spreading the word".  Imagine this is what lies behind the glowing Door Number Two, as endorsed by the calculus of walking away from the sunk cost of a losing proposition.  
My view is that if the original plan wasn't decided on political rather than rational grounds, the plan will likewise be executed on political rather than rational grounds (as any rational person ought to expect).  From where I sit, if this article doesn't take on the full decision context (at least somewhere), it will forever have one foot firmly planted in strawman rhetoric.  
It's pretty easy to fall into the trap of imagining that the reputational sunk cost and the economic sunk cost both have the same sign, whereas much of the time the reputational sunk cost would better be modelled as pot committed (defined, for non-poker players, at glossary of poker terms). 
Of course, this is all a big heap of OR until someone finds something cite-worthy.  Unfortunately, on that score, I've got nothing. — MaxEnt 19:37, 20 December 2016 (UTC)
thread_title:  Social reputation pot commitment 

message: Someone made the same point three years ago. The fact that no consensus has been reached in three years may itself be evidence that the proposal to strike this example is not supported by the community. Nevertheless, it is important to note that we have now heard the objection twice. I have therefore moved the earlier comment here to keep them together:
==== Pharmaceutical R&D justification fallacy ====
"So a pharmaceutical company’s attempt to justify high prices because of the need to recoup R&D expenses is fallacious. The company will charge market prices whether R&D had cost one dollar or one million dollars."
What does this passage miss?
Are market prices not determined by supply and demand?
Does supply not depend on the costs producers face?
Is R&D not one of those costs?
Does the "fallacy" hinge on the semantics of the word "recoup?"  — Preceding unsigned comment added by 2602:306:CEB0:9EA0:445C:D3DA:36AC:8913 (talk) 20:27, 26 April 2016 (UTC)
replies: text: The very idea of "market price" here is in error.  We are typically dealing with a product that the company will have a monopoly on, at least for a while.  Huw Powell (talk) 20:30, 27 August 2016 (UTC)
thread_title:  Same point made three years ago 

message: "So a pharmaceutical company’s attempt to justify high prices because of the need to recoup R&D expenses is fallacious. The company will charge market prices whether R&D had cost one dollar or one million dollars."
What does this passage miss?
Are market prices not determined by supply and demand?
Does supply not depend on the costs producers face?
Is R&D not one of those costs?
Does the "fallacy" hinge on the semantics of the word "recoup?"  — Preceding unsigned comment added by 2602:306:CEB0:9EA0:445C:D3DA:36AC:8913 (talk) 20:27, 26 April 2016 (UTC)
replies: text: The very idea of "market price" here is in error.  We are typically dealing with a product that the company will have a monopoly on, at least for a while.  Huw Powell (talk) 20:30, 27 August 2016 (UTC)
thread_title:  Pharmaceutical R&D justification fallacy