Two avid sports fans plan to travel 40 miles to see a basketball game
One of them paid for his ticket
Other got one for free from a friend
A blizzard is announced for the night of the game.
Which of the two ticket holders is more likely to brave the blizzard to see the game?
One of them paid for his ticket
Other got one for free from a friend
A blizzard is announced for the night of the game.
Which of the two ticket holders is more likely to brave the blizzard to see the game?
The fan who paid for his ticket will be more determined to see the match because ‘he has more to lose’
Even as we articulate our answer, we realise the flaw in it. The money is already gone.
Taking the additional risk of driving in a snowstorm will not get it back.
#Behavior
Even as we articulate our answer, we realise the flaw in it. The money is already gone.
Taking the additional risk of driving in a snowstorm will not get it back.
#Behavior
In 2011, Nobel winner Daniel Kahneman, who made behavioural economics a widely known idea, published Thinking, Fast and Slow, which laid out his ideas in an accessible form
#Book #DanielKahneman #behaviouraleconomics
#Book #DanielKahneman #behaviouraleconomics
The Sunk Cost Fallacy describes our tendency to follow through on an endeavor if we have already invested time, effort, or money into it, whether or not the current costs outweigh the benefits.
#Sunkcost #behavorialfinance #humans
#Sunkcost #behavorialfinance #humans
The sunk cost fallacy means that we are making irrational decisions because we are factoring in influences other than the current alternatives. The fallacy affects many different areas of our lives leading to suboptimal outcomes.
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