{"id":5472,"date":"2021-11-05T17:15:45","date_gmt":"2021-11-05T17:15:45","guid":{"rendered":"https:\/\/dircompartners.com\/the-sunk-cost-fallacy\/"},"modified":"2021-11-05T17:15:45","modified_gmt":"2021-11-05T17:15:45","slug":"the-sunk-cost-fallacy","status":"publish","type":"post","link":"https:\/\/dircompartners.com\/en\/the-sunk-cost-fallacy\/","title":{"rendered":"The sunk cost fallacy"},"content":{"rendered":"<div  class=\"tatsu-r1WZOVJ7Dt tatsu-section  tatsu-bg-overlay   tatsu-clearfix\" data-title=\"\"  data-headerscheme=\"background--dark\"><div class='tatsu-section-pad clearfix' data-padding='{\"d\":\"20px 0px 90px 0px\"}' data-padding-top='20px'><div class=\"tatsu-row-wrap  tatsu-wrap tatsu-row-one-col tatsu-row-has-one-cols tatsu-medium-gutter tatsu-reg-cols  tatsu-clearfix tatsu-rJlbOVJmDt\" ><div  class=\"tatsu-row \" ><div  class=\"tatsu-column  tatsu-bg-overlay tatsu-one-col tatsu-column-image-none tatsu-column-effect-none  tatsu-rkZOE17PF\"  data-parallax-speed=\"0\" style=\"\"><div class=\"tatsu-column-inner \" ><div class=\"tatsu-column-pad-wrap\"><div class=\"tatsu-column-pad\" ><div  class=\"tatsu-module tatsu-text-block-wrap tatsu-r1KFEyQPY  \"><div class=\"tatsu-text-inner tatsu-align-center  clearfix\" ><style>.tatsu-r1KFEyQPY.tatsu-text-block-wrap .tatsu-text-inner{width: 100%;text-align: left;}<\/style>\n<p>\u201cThe phenomenon whereby a person is reluctant to abandon a strategy or course of action because they have invested heavily in it, even when it is clear that abandonment would be more beneficial.\u201d<\/p>\n<p>The sunk-cost fallacy creeps into a lot of major financial decisions. Have you ever felt attached to an investment long after you should have sold it? You know you are never going to get your money back, and you know the cost of opportunity is high\u2026but you don\u2019t sell.<\/p>\n<p>Have you ever persevered with a relationship \u2013 friend or love &#8211; even when the damage to your personal energy is evident? Have you ever taken too long to dismiss an employee because you have invested time and money in their training?<\/p>\n<p>These are all examples of the \u201csunk cost effect,\u201d which occurs when you choose to do or continue something only because you have invested (unrecoverable) resources in it in the past. Sometimes it is the feeling of guilt, the shame of acknowledging a mistake or the fear of the consequences. It is a normal human cognitive bias.<\/p>\n<p>But it is a core lesson in business economics classes, and also in personal finance self-help books that any unrecoverable cost sunk in the past is irrelevant when deciding what to do next.<\/p>\n<p>In our world at Dircom Partners, we see this happen too often. We speak with companies and individuals who stick with their agencies and even go on to increase their business with them due to the sunk cost fallacy: they have invested in them for too long and they are afraid of losing that goodwill.<\/p>\n<p>Not only are they missing the opportunity to meet other experts who could bring more fresh and modern ideas, but they are also paying a premium price because their learning curve is flat.<\/p>\n<p>We are not advocating here for a full swing. No, don\u2019t risk the continuity of your business, but do healthy \u201csanity checks\u201d regularly, bringing new agencies on board, to hear new ideas and refresh the enthusiasm and dedication of the present incumbent.<\/p>\n<p>Remember: when sunk costs affect strategic decisions, there will be serious consequences.<\/p>\n<p>Move.<\/p>\n<p>Fast.<\/p>\n<p>Call us.<\/p>\n<\/div><\/div><\/div><\/div><div class = \"tatsu-column-bg-image-wrap\"><div class = \"tatsu-column-bg-image\" ><\/div><\/div><div class=\"tatsu-overlay tatsu-column-overlay tatsu-animate-none\" ><\/div><\/div><style>.tatsu-row > .tatsu-rkZOE17PF.tatsu-column{width: 100%;}.tatsu-rkZOE17PF.tatsu-column > .tatsu-column-inner > .tatsu-column-overlay{mix-blend-mode: normal;}.tatsu-rkZOE17PF > .tatsu-column-inner > .tatsu-top-divider{z-index: 9999;}.tatsu-rkZOE17PF > .tatsu-column-inner > .tatsu-bottom-divider{z-index: 9999;}.tatsu-rkZOE17PF > .tatsu-column-inner > .tatsu-left-divider{z-index: 9999;}.tatsu-rkZOE17PF > .tatsu-column-inner > .tatsu-right-divider{z-index: 9999;}@media only screen and (max-width:1377px) {.tatsu-row > .tatsu-rkZOE17PF.tatsu-column{width: 100%;}}@media only screen and (min-width:768px) and (max-width: 1024px) {.tatsu-row > .tatsu-rkZOE17PF.tatsu-column{width: 100%;}}@media only screen and (max-width: 767px) {.tatsu-row > .tatsu-rkZOE17PF.tatsu-column{width: 100%;}}<\/style><\/div><\/div><\/div><\/div><div class=\"tatsu-section-background-wrap\"><div class = \"tatsu-section-background\" ><\/div><\/div><div class=\"tatsu-overlay tatsu-section-overlay\"><\/div><style>.tatsu-r1WZOVJ7Dt .tatsu-section-pad{padding: 20px 0px 90px 0px;}.tatsu-r1WZOVJ7Dt .tatsu-section-offset-wrap{transform: translateY(-0px);}.tatsu-r1WZOVJ7Dt > .tatsu-bottom-divider{z-index: 9999;}.tatsu-r1WZOVJ7Dt > .tatsu-top-divider{z-index: 9999;}.tatsu-r1WZOVJ7Dt .tatsu-section-overlay{mix-blend-mode: normal;}<\/style><\/div>\n","protected":false},"excerpt":{"rendered":"<div><a href=\"https:\/\/dircompartners.com\/en\/the-sunk-cost-fallacy\/\" class=\"exp-read-more exp-read-more-underlined\">Read More<\/a><\/div>\n","protected":false},"author":2,"featured_media":5467,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[74],"tags":[],"class_list":["post-5472","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cambio"],"_links":{"self":[{"href":"https:\/\/dircompartners.com\/en\/wp-json\/wp\/v2\/posts\/5472","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dircompartners.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dircompartners.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dircompartners.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dircompartners.com\/en\/wp-json\/wp\/v2\/comments?post=5472"}],"version-history":[{"count":0,"href":"https:\/\/dircompartners.com\/en\/wp-json\/wp\/v2\/posts\/5472\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dircompartners.com\/en\/wp-json\/wp\/v2\/media\/5467"}],"wp:attachment":[{"href":"https:\/\/dircompartners.com\/en\/wp-json\/wp\/v2\/media?parent=5472"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dircompartners.com\/en\/wp-json\/wp\/v2\/categories?post=5472"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dircompartners.com\/en\/wp-json\/wp\/v2\/tags?post=5472"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}