Throwing good money after bad – Why We Fall Victim to the Sunk Cost Fallacy and How to Beat It
The Sunk Cost Fallacy
Imagine you have finally graduated from college, gotten a job, and are moving out of your childhood room at home and into a tiny room the size of a closet in the big city. You’re cleaning out and packing up old T-shirts you never wear, sweaters that went out of style years ago, and pants that just never fit you right. Since your apartment is so tiny, you barely have enough room in your closet to fit the clothes you wear on a daily basis, let alone all of these other items. But you love those T-shirts and the sweaters might come back into style and the pants might fit better if you lose some weight. So you pay for a storage unit in the city and waste some of your already very small income. Are you ever really going to wear those T-shirts again? Are those sweaters ever going to come back in style? You know the answer is probably not, and you also wouldn’t miss them if they were gone. But this is hard to remember when you think about all of the money you have already invested in all of these clothes. So instead, you choose to spend even more money on storage to keep items you spent money on in the past but don’t use in the present and probably won’t use in the future. What is this all about?
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