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Sunk Cost

7/19/2016

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There is a fallacy, called “Sunk Cost”, that people — probably most all of us at one time or another — fall prey to: that is to make decisions about the future based on past investment.

I am amazed how often I hear people say something like 'Well, option A would be the best, but we’ve already invested so much in option B that we should just stick with it'.  No!  Your investment in option B is gone. The past is past. That cost is sunk. You can’t get it back, no matter what you do. If option A is truly the right decision from this point, then you should pursue option A, right away. Pursuing option B at this point is just “throwing good money after bad”.

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    Philip Brittan is the General Partner of Crazy Peak LLC

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