money sinking into a hole

Ignore Sunk Costs

The plan was Location A. 

It was a good plan, solid, seemed set. 

We spent time negotiating the details: timing, compensation, etc. 

Then two days before the event, Location B presented itself. 

In many ways, Location B was better.

More space, more privacy, no cost to use it.

But we’d already committed to paying for Location A. 

What would you have done?

Spoiler: We moved the event to Location B.

Because the cost of Location A was a sunk cost, we chose to ignore it. 

Producing the event was gonna cost the same whether we were there or not. 

The money we paid there became irrelevant to the decision. 

This is rational.

But extremely difficult for the human mind to wrap itself around. 

We have brains with a strong bias to loss aversion.

We like gaining — but we HATE losing.

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So we’ll stick with an unpleasant situation just to avoid “losing” the money (or time or energy or whatever).

Are you getting suckered in by sunk costs anywhere in your life?

If you can’t get it back, don’t let your brain convince you it matters for what you decide going forward.

Irrationally yours,

Rachel

PS – Did you know that the PS is pretty much the most read part of the email? Marketers advise that you make it count by putting a call to action here. I’m not doing that though, except maybe: Do something nice for yourself right now?

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