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The difficult thing with sunk costs that this article fails to really cover is that very often we don't know they're sunk costs until after the fact. In the mid
by ryanwaggoner 17y ago
The difficult thing with sunk costs that this article fails to really cover is that very often we don't know they're sunk costs until after the fact. In the middle of a situation, it's very difficult to predict whether things will only get worse and you should abandon your efforts. How many successful companies and products got off to a rough start and would have been shut down if this kind of analysis had been applied?
- smartbear 17y agoI like your point, but in the specific examples given of my own mistakes with sunk costs in startups, I usually did know it was wrong at the time. I just didn't have the stones to pull the trigger.
- mikeryan 17y agoNo this isn't true. A cost is "sunk" as soon as the money (or time) has been spent. The fact that a cost is "sunk" shouldn't be confused with determining the value of an expenditure. When you start throwing in "value" the whole concept gets confusing. Sunk costs _only_ mean that the fact that money has been spent on something should not affect future decisions. What you got out of spending that money should absolutely be considered in future spending.