4 ms·

I find the example in the article a bit strange regarding the concert. Wouldn't going to the concert in a sense "recover" the $50 if you valued the experience

I find the example in the article a bit strange regarding the concert. Wouldn't going to the concert in a sense "recover" the $50 if you valued the experience of going to the concert at $50 or more?

redm 5y ago
They provide several other articles for additional context, such as the Concorde.
- redis_mlc 5y ago
  The article is literally trash. Other people have mentioned the poor concert ticket example. But the Concorde example is equally bad. The Concorde project started as an exploration between Boeing and European partners. Boeing didn't believe in any of the assumptions, including primacy of hub and spoke, so pulled out. The British did later threaten to pull out of the project over costs, but the French threatened everything short of war. So the British continued for reasons of diplomacy. There was the additional benefit of European technology development, likely resulting in Airbus. How bad was the Concorde project? The British and French not only had separate management and test teams, but also separate assembly lines. The British test pilot said the two teams barely talked to each other, with the French being rigid and standoffish. https://www.airbus.com/newsroom/stories/concorde-day.html https://www.airbus.com/newsroom/stories/concorde-day.html
Hokusai 5y ago
No, you don't get the money back. In theory you should act as if you got the tickets for free. You are going because you find the concert interesting, you do not go because you have already spend $50. Also you take into account future costs. If you want to go to the concert and there are several days that you can go, you choose to go to the one that you already have tickets. Attending any other day will cost you $50. Another cost is the social consequences. Maybe you do not want to go anymore, but you know that your mother will be pissed off after she gave you the money. Or you may be judged as irresponsible by your friends if you don't go. That you paid in the past do not matter anymore. But are there future consequences what you need to worry about.
tyjaksn 5y ago
From the article: “In economic terms, sunk costs are costs that have already been incurred and cannot be recovered.” It wouldn’t be a sunk cost if if going to the concert was still valued at $50 or more.
- djmips 5y ago
  This analogy is so very out of date. I've been able to sell my tickets for face value on the day of the event, using the 'net for over ten years now. And I could have made a killing if I really wanted to.
readingnews 5y ago
That example is one I have seen in nearly every article I have read on the sunk cost fallacy, and every time a thought occurs: "can anyone come up with a better one?" If I am truly sick on the day of the concert, I call my friends and give them the ticket. It seems trivial.
- orwin 5y ago
  The best example i know is related, it that you feel sick in the middle of a meal at a one-star restaurant (let's say on the third dish).
  - HarHarVeryFunny 5y ago
    That's a decent example, but I don't see why one-star vs five-star would make any difference. It's also depends if continuing to sink time/money into the meal (by having desert, say) would make you feel more sick or not. Unless you feel like vomiting, maybe you want to stay for that tasty desert anyways! You'd only be committing the "sunken cost" mistake if you continued with the meal without having some good forwards-looking (social, perhaps) reason to do so.
HarHarVeryFunny 5y ago
It does seem a poor example, but I guess the intended point is that the logical decision should be "will I more enjoy going, or not going?" rather than taking the already "sunk" money into account. Of course in the real world, especially if the money was a significant amount to you, your enjoyment of staying home might genuinely be tainted by the wasted money, and that's just as legitimate a factor as anything else figuring into your "based on where I'm at now" assessment. I think a better example, maybe appropriate to this forum, might be where you've been spending significant spare time working on a project with dreams of future riches, and it eventually dawns on you the payoff isn't going to happen (maybe the opportunity has passed, or whatever - reason doesn't really matter). The question is do you now continue working on the project to "at least get the satisfaction of completing it, given how much time has been sunk", or do you cut your losses and abandon it. Even this isn't a "pure" example since there's no reason not to continue if the modified goal (satisfaction) is worth the remaining cost to you. It's probably the case that in most, maybe all, "sunken cost" scenarios there is some benefit to continuing to invest in it, but the "sunken cost" may distort your judgement of assessing that benefit. Even with Concorde, there was considerable cachet and advertising benefit in operating Concorde, even if it wasn't paying for itself operationally.
djmips 5y ago
I've always been able to sell my tickets at the last minute and I always have sold at cost even though I could have sold for more. This analogy is bad. There is such a thing as a sunk cost fallacy but this concert example is poor.

I find the example in the article a bit strange regarding the concert. Wouldn't going to the concert in a sense "recover" the $50 if you valued the experience of going to the concert at $50 or more?

redm 5y ago

They provide several other articles for additional context, such as the Concorde.

redis_mlc 5y ago
The article is literally trash. Other people have mentioned the poor concert ticket example. But the Concorde example is equally bad. The Concorde project started as an exploration between Boeing and European partners. Boeing didn't believe in any of the assumptions, including primacy of hub and spoke, so pulled out. The British did later threaten to pull out of the project over costs, but the French threatened everything short of war. So the British continued for reasons of diplomacy. There was the additional benefit of European technology development, likely resulting in Airbus. How bad was the Concorde project? The British and French not only had separate management and test teams, but also separate assembly lines. The British test pilot said the two teams barely talked to each other, with the French being rigid and standoffish. https://www.airbus.com/newsroom/stories/concorde-day.html https://www.airbus.com/newsroom/stories/concorde-day.html

Hokusai 5y ago

No, you don't get the money back. In theory you should act as if you got the tickets for free. You are going because you find the concert interesting, you do not go because you have already spend $50. Also you take into account future costs. If you want to go to the concert and there are several days that you can go, you choose to go to the one that you already have tickets. Attending any other day will cost you $50. Another cost is the social consequences. Maybe you do not want to go anymore, but you know that your mother will be pissed off after she gave you the money. Or you may be judged as irresponsible by your friends if you don't go. That you paid in the past do not matter anymore. But are there future consequences what you need to worry about.

tyjaksn 5y ago

From the article: “In economic terms, sunk costs are costs that have already been incurred and cannot be recovered.” It wouldn’t be a sunk cost if if going to the concert was still valued at $50 or more.

djmips 5y ago
This analogy is so very out of date. I've been able to sell my tickets for face value on the day of the event, using the 'net for over ten years now. And I could have made a killing if I really wanted to.

readingnews 5y ago

That example is one I have seen in nearly every article I have read on the sunk cost fallacy, and every time a thought occurs: "can anyone come up with a better one?" If I am truly sick on the day of the concert, I call my friends and give them the ticket. It seems trivial.

orwin 5y ago
The best example i know is related, it that you feel sick in the middle of a meal at a one-star restaurant (let's say on the third dish).
- HarHarVeryFunny 5y ago
  That's a decent example, but I don't see why one-star vs five-star would make any difference. It's also depends if continuing to sink time/money into the meal (by having desert, say) would make you feel more sick or not. Unless you feel like vomiting, maybe you want to stay for that tasty desert anyways! You'd only be committing the "sunken cost" mistake if you continued with the meal without having some good forwards-looking (social, perhaps) reason to do so.

HarHarVeryFunny 5y ago

It does seem a poor example, but I guess the intended point is that the logical decision should be "will I more enjoy going, or not going?" rather than taking the already "sunk" money into account. Of course in the real world, especially if the money was a significant amount to you, your enjoyment of staying home might genuinely be tainted by the wasted money, and that's just as legitimate a factor as anything else figuring into your "based on where I'm at now" assessment. I think a better example, maybe appropriate to this forum, might be where you've been spending significant spare time working on a project with dreams of future riches, and it eventually dawns on you the payoff isn't going to happen (maybe the opportunity has passed, or whatever - reason doesn't really matter). The question is do you now continue working on the project to "at least get the satisfaction of completing it, given how much time has been sunk", or do you cut your losses and abandon it. Even this isn't a "pure" example since there's no reason not to continue if the modified goal (satisfaction) is worth the remaining cost to you. It's probably the case that in most, maybe all, "sunken cost" scenarios there is some benefit to continuing to invest in it, but the "sunken cost" may distort your judgement of assessing that benefit. Even with Concorde, there was considerable cachet and advertising benefit in operating Concorde, even if it wasn't paying for itself operationally.

djmips 5y ago

I've always been able to sell my tickets at the last minute and I always have sold at cost even though I could have sold for more. This analogy is bad. There is such a thing as a sunk cost fallacy but this concert example is poor.