Unearthing new concepts: Sunk-cost bias

Kintsugi (金継ぎ) is a technique used in Japanese culture. If a pot breaks, it is repaired with a mixture of gold, silver or platinum.


This ties back to deeper roots in Japanese philosophy. A common theme is to embrace the tarnished, flawed or imperfect things. Of course, wear-and-tear (osteoporosis) and eventual senescence are natural processes, but this is seen as further reason to keep an ornament around. The cracks and blemishes are a testament to the object’s service, rather than used as reason to get rid of it.


But kintsugi is also a metaphor for life. We will make mistakes, face hardship and go through a lot of remodelling. But it is through these things that we become unique, strong and authentic.

One would hope to make rational decisions based on the future values of objects, investments and experiences. Here’s where the sunk cost bias or fallacy comes into play. Sunk cost bias: your decisions are in fact tainted by the emotional investments you accumulate, and the more you invest in something the harder it becomes to abandon it. A sunk cost in economics is a cost that has already been incurred and can’t be recovered.

A famous experiment was conducted by Hal R. Arkes and Catherine Blumer in 1985. A group of people spent $100 on a ski trip in Michigan, but soon after found a better ski trip in Wisconsin for $50 and bought a ticket for this trip too. They were then told that both trips were on the same day and that they could only make one. The tickets could also not be refunded or sold on to another party. So they had to decide between the $100 trip or the (better quality) $50 trip…

Over half the people in the study chose to stick with the $100 trip. And that’s the sunk-cost bias in action. The money was gone no matter what. The Michigan ski trip was less fun but the majority of people stuck with it because the sunk cost incurred was greater. The fallacy really does play games with you… you no longer look at which experience will be better but instead try your utmost best to negate the feeling of loss.

Economists and investors love banging on about the sunk-cost bias. But, perhaps rightly so? The fallacy has implications for many questions. When do you say no to something? How do you know when to cut your losses?

Remember the bigger the commitment, the harder it is to let go!



This issue’s book recommendation is in fact NOT a book recommendation. I’ve recently been listening to The Tim Ferriss Show (it’s a podcast you can download on your phone). He’s an American entrepreneur, writer and public speaker and he interviews high performers and talented people to learn their tips and tricks. If you’re willing to give it a go, do skip the first couple of minutes to avoid advertisements!


'If your compassion does not include yourself, it is incomplete.’ (Jack Kornfield)


Have a blessed November and do wrap up warm, for it is getting very cold!


Take care,


Haseeb Akhtar, 2nd year medical student, London.


PS: If you are interested in this series of posts, please subscribe to get the newsletter directly by email here (and catch up on missed issues): https://www.getrevue.co/profile/hasbroakhtar

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