Sunk costs aren’t restricted to one domain or another, you had some bad luck by missing out on your sports game, but the problem doesn’t have to do with sunk costs.

A good sports-related example for sunk costs is if you’ve paid $50 for a sports ticket, and your ticket is stolen–will you pay for another ticket?

Many people would say no, incorrectly reasoning that $100 is too much for a ticket. However, the first $50 for the ticket is already gone, the question is no different than whether you would have paid $50 for the original ticket.

My example discounts the fact that you have relatively less money after paying for the first ticket, which would be a factor, but otherwise the reasoning is sound.

-Scott

But it led to me making such a stupid decision. The badgers had ten times more yards than us during half-time at the Michigan/ Wisconsin game today (it was 19-0), so I left the stadium to go home and finish up a few things before I go out tonight. I figured I paid for the ticket, but I shouldn’t really evaluate that because I was having a shitty time at the game.

The score is now 27-19, Michigan. Rule: sunk costs don’t apply to attending sporting events.

Actually that’s precisely the sunk cost fallacy.

See, the timing of the decision is when it is most important:

In my example, I was making the decision between staying and leaving, AFTER I had already purchased the ticket and was at the party (i.e. I couldn’t get a refund). The first $12 was already spent, so my decision could not include the $12.

Instead, the actual decision was between $0 to stay at the current show or $7 to go to the one next door.

If you were on a strict budget, or had absolutely no money, then the decision would still be the same (stay where you are). However, the fact that you wasted $12 initially has nothing to do with the future decision.

-Scott

I believe that understanding the entire cost (including sunk costs + future costs) is more practical in a sense, because we only have a finite amount of resources (i.e. money or time). This gives you a more realistic view of whether it is worth it or not and eliminates the feeling of later when you realize that you spent too much money on entertainment. (otherwise we’d always be going for the $7 second show because it seems so cheap)

What do you think?

A lot of persuasion is activating the biases people have under the surface, and I would say that this is no different. You need to be careful, however, as manipulating biases so that people make poor decisions for themselves can be a bit of a gray zone in the ethical front.

-Scott

I’ve seen people eat them self sick with dessert, because they already paid for it. What – stop? But I already paid for it …