The Sunk Cost Fallacy: people fall into this trap on a daily basis without even realizing it.
The mindset of finishing your coffee because you paid for it even though it’s cold and not enjoyable. Your loss aversion system keeps you from avoiding the extra calories or saving the time that you would have used to finish a book or movie you don’t even enjoy.
Hypothetically speaking, you receive free tickets from a friend to attend a sporting event the following weekend. On a separate occasion you purchase tickets for the same type of game. Both weekends are hit with snow storms.
According to behavioral economics, you would try to weather the storm on the weekend you paid for the tickets to “get your money’s worth.” This shouldn’t be the attitude to have because the money is gone in either scenario. I would avoid making mistakes like these, and knowing the psychology behind it can help you understand the psychology behind the sunk cost fallacy.
This is applicable to long term relationships as well.
Sauurabhh wrote, “Relationships are all about investing time, energy and even money in each other. We are talking about the emotional economy.”
You’ve invested so much time and energy into someone, but all those resources are gone for good. The prison of your past may keep you from happiness, and, in order to reach this state, one must break old habits. It’s extremely difficult though because you may actually somewhat enjoy your life with that person, but you think you can do better.
Sauurabhh went on to say, “Once you have spent a big chunk of your limited existence on someone, it is really difficult to break it off and repeat the process once again with someone else no matter how much better they might be from the previous investment”.
I don’t think the length of a relationship should be an important determinant in whether you want to continue the relationship.
On the flip side, one must be careful so they don’t give up on things to quickly and exclaim “sunk costs!” every time they feel like they’re not making progress or wasting time. This could bleed into a giving up attitude which is not ideal. Just being aware of the sunk cost fallacy is all you need so you can easily avoid waste.
From an evolutionary perspective, people are more likely to survive by avoiding losses rather than maximizing gains. In psychologist Daniel Kahneman’s book “Thinking Fast and Slow” he wrote that organisms that place more urgency on avoiding threats than on maximizing opportunities are more likely to pass on their genes.
Our tendency is to overvalue a potential loss over a possible gain.
The main point I’m trying to make is that you shouldn’t finish things just because you’ve invested a bit of time or money into it. After you’ve spent time or money it’s irretrievable, that is all down the drain.