Alternative Dispute Resolution
Feb. 21, 2020
Sunk costs
How your mediator can help you avoid eating liver and onions
Shutterstock
Driven by loss aversion, wars have been fought due to what is known as the "sunk cost fallacy." Everything from my mother's meatloaf, to a movie ticket, an outdated cellphone, to billions of dollars in armaments, can represent "sunk costs." A sunk cost is one that has already been spent and cannot be recovered. Sunk costs should not be considered when making decisions. Only costs relevant to a specific decision, which may change depending on that decision, should be w...
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