Personal observations on life

Errors in thinking – Part 4

The Sunk-Cost Fallacy

When we have invested a lot of time, money and energy on something, that investment itself becomes a reason to carry on doing the activity, even if we are dealing with a lost cause. The more we invest, the greater the sunk costs are, and the greater the urge to continue becomes.

For example, some people continue in toxic relationships just because they have already invested a lot of time, money and energy.

This irrational behavior is driven by a need for consistency, because consistency signifies credibility. We find contradictions detestable and upsetting. If we cancel a project half way, there is a contradiction there: we are admitting that once we thought it was worth trying, and now we don’t. So we continue with the project even after realizing its meaninglessness.

Rational decision making requires us to forget about the costs incurred till date. No matter how much we have invested in something, it is only our assessment of the future that counts.

Personal observations on life

Errors in thinking – part 2: Swimmer’s Body Illusion

Often, we confuse results of a process with the selection for the process. For example, why are Harvard graduates so brilliant? Is it because Harvard gives great instruction? Need not be. It could be because Harvard selects only the best of the best!

similarly, why do swimmers have such excellent physiques? Is it because swimming is great for building such physiques? Need not be. It could be because people with good physiques go for swimming.

So, does it mean that the process is worthless? Not really. Knowing about the Swimmer’s Body Illusion guards us against falling prey to false advertisements and promotional campaigns.