Sticking to anything even after evidence of it being unlikely to be successful, just because you have invested much towards it, is a common human behaviour known as the 'sunk-cost fallacy.'
This phenomenon involves continuing an endeavour simply because time, effort, or money has already been invested, regardless of whether the current costs outweigh the benefits.
People often find themselves stuck in unfulfilling situations due to this cognitive bias. Let's explore some of the notable symptoms of the sunk-cost fallacy:
Buy 1, Get One
In the realm of retail, individuals may encounter the 'Buy 1 get one' offer. For instance, when purchasing a pizza, people might not be particularly hungry after consuming one, yet they proceed to eat it because they have already invested money.
This behaviour exemplifies the sunk-cost fallacy, where individuals continue an activity solely based on their past investment.
High-priced movie tickets can lead to the sunk-cost fallacy. Once viewers enter the cinema and the movie does not meet expectations, some may still stay till the end, considering the money already spent on the ticket.
This illustrates how individuals may endure an experience solely due to the prior investment, even if the enjoyment diminishes.
Investing in stocks provides another example. If someone purchases stocks at Rs 10,000, and the market value decreases to Rs 1,000, individuals might resist selling to avoid realising the loss.
Instead, they may invest more to average down the cost, demonstrating a classic symptom of the sunk-cost fallacy.
When individuals invest in repairing their vehicle's engine and encounter subsequent issues, they may hesitate to sell the vehicle.
The reasoning lies in the emotional and financial investment already made in the form of repairs. This tendency to invest further despite recurring problems is a symptom of the sunk-cost fallacy.
In personal relationships, the sunk-cost fallacy can manifest when individuals stay in toxic or unfulfilling partnerships. Despite the relationship turning unfavourable, people may resist considering a breakup due to the time, energy, and money invested.
This hesitancy to end a relationship showcases the powerful influence of the sunk-cost fallacy.
Recognising these symptoms can empower individuals to make decisions based on current circumstances rather than being unduly influenced by past investments.