24 ms·
I'm afraid I have to turn around and say that it is you who does not have a proper understanding of the sunk costs fallacy. The future value of the sunk costs i
by nkoren 11y ago
I'm afraid I have to turn around and say that it is you who does not have a proper understanding of the sunk costs fallacy. The future value of the sunk costs is not important -- in fact, thinking that it is important is the very definition of the fallacy. Rather, the future value of all costs is what is important, whether those costs are sunk or not.
To illustrate, here's a simplified example. We can buy one of two Mars missions: Mars Mission A, which costs $100, of which we have already paid a $10 non-refundable deposit, and Mars Mission B, which costs $30, but we have not yet spent anything on it.
The $10 we have already spent absolutely does have future value -- $10 worth of future value, if we pursue Mars Mission A. Its future value is, however, irrelevant, because Mars Mission A has $90 worth of future costs, compared to $30 of future costs for Mars Mission B. The Sunk Costs Fallacy is to believe that the $10 continues to have any relevance in such a scenario. In truth, the future costs are the only costs which matter.