In economics, a sunk cost is any past cost that has already been paid and cannot be recovered. For example, a business may have invested a million dollars into new hardware. This money is now gone and cannot be recovered, so it shouldnâ€™t figure into the businessâ€™s decision making process.
The article goes on to describe common situations where we fall for it. The solution of making a pro and con list did not really impress me. Really, the solutions are:
- Be willing to cut losses and run.Â The Cull and Surrender post is about being willing to cut out things not worth the time.
- Actively expose mistakes to find.Â Embarrassment about being wrong or having made a mistake keeps us on the path of that bad place. On Being Wrong.
- Act like the present is all there is.Â Past experience contributes to making a decision. But the present case should be handled as a new, independent situation and not a continuation.