🌳 How The Sunk Cost Fallacy Is Ruining Your Life

QUOTE OF THE DAY

In simple terms, a defeat is not the same as being defeated. A defeat is out of your control, being defeated is completely within it.

THE SUNK COST FALLACY

The sunk cost fallacy is a cognitive bias that leads individuals to make irrational decisions based on past investments, even when those investments are no longer recoverable or relevant to the current situation.

To put that into perspective it’s like someone going to university for a four-year course, going for one year and hating it. Hating every day, feeling like you have no future potential with that course yet your reason for continuing is that you don’t want your last year to be a waste.

Or like being in a 5-year relationship and you’re miserable, you argue yet your reason for not ending what should be ended is that you’ve been together for 5 years.

There are several reasons why people fall prey to the sunk cost fallacy. Firstly, people often tend to have a strong aversion to loss. They feel that if they abandon a project or decision, they will lose not only the resources already invested but also the potential gains they anticipated. This fear of loss can cloud judgment and lead to continued investment in future endeavours.

To overcome the sunk cost fallacy you can do a few things:

1. Recognize sunk costs: Understand that past investments are irrelevant to future decision-making. Separate the emotional attachment to sunk costs from the current situation.

2. Evaluate alternatives objectively: Consider the current circumstances, prospects, and potential outcomes without being influenced by sunk costs. Analyze the situation as if no prior investment had been made.

3. Seek external perspectives: seek someone who can provide an unbiased viewpoint.

ACTIONABLE NEXT STEPS:

Assess whether you’re stuck in a sunk cost cycle, It won’t seem apparent until you face it head-on from the most un-bias perspective you can conjure up.

TAKEAWAYS:

Understand that past investments are irrelevant to future decision-making. Separate the emotional attachment to sunk costs from the current situation.

BOOK OF THE WEEK ⤵️

The book of the week is ‘The One Thing’ by Gary Keller. It’s a self-help book that focuses on the importance of focusing on one goal at a time. The book focuses on a few essential concepts, such as prioritization, creating goals, and the effectiveness of single-tasking over multitasking, among other things. Check it out HERE

CREATOR OF THE WEEK ⤵️

The creator of the week is an Australian-based influencer @Jak.piggott. He makes content all focused on self-improvement, self-awareness and helping the modern man improve. He shares advice, life hacks and more! Check him out HERE

LESSON OF THE DAY ⤵️

Trust everyone until they give you a reason not to trust them.

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