From: BBC
The trick to learning when to cut your losses
You’ve popped down the shops to pick up some milk. Halfway there you remember that this particular shop is actually closed on Sunday afternoons. And as far as you know, there are no others open nearby. Still, you’ve already spent 10 minutes walking in that direction, so you might as well at least finish your journey, right?
Unless you were already desperate to stretch your legs, this is a transparently stupid way of thinking. Yet, bizarrely, this illogical cognitive pattern is widespread in decision-making; often, involving choices with far higher stakes.
A gambler might call it chasing your losses. The British saying – ‘don’t throw good money after bad’ – captures a similar sentiment. Economists call it the sunk cost fallacy, and it’s ubiquitous.
Read the whole story (subscription may be required): BBC
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