Quick Tip: Recognizing Sunk Costs

Being indifferent towards and developing the ability to recognize sunk costs often leads to preferable outcomes at home and in business. According to the world’s most accurate encyclopedia (Wikipedia), “sunk costs are retrospective (past) costs that have already been incurred and cannot be recovered.”

As most people are loss averse, they will often continue down a path of action that produces a less valuable outcome solely because they want to justify the work they have already performed.  Learning to let go, discard your previous attempts and use a new method often can allow you to deliver a better outcome more quickly.

 

Casey JonesCasey Jones
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