Motley Fool Money “The rest of your life begins now.”
Oct 6, 2020
Discover the intriguing concept of the sunk cost fallacy and how it impacts our decisions in life and investing. Professor Richard Nisbett dives into why we often cling to past investments, even when they're no longer enjoyable or beneficial. He encourages listeners to adopt a forward-thinking mindset and to let go of what holds them back. This episode inspires a shift in perspective, challenging the way we approach seemingly lost causes.
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Economists and Sunk Costs
- Economists make different daily decisions than most people.
- They readily abandon projects, meals, or movies if they're not worthwhile, demonstrating sunk cost principles.
Overcoming Sunk Costs
- Resist sunk costs and leave situations you're not enjoying.
- Don't waste time or money on something just because you've already invested in it.
The Basketball Game
- Imagine paying for a basketball ticket but facing bad weather and a missing star player.
- Economists would say to skip the game, prioritizing future enjoyment over the sunk cost.
