{"id":36501,"date":"2020-05-03T13:00:32","date_gmt":"2020-05-03T20:00:32","guid":{"rendered":"https:\/\/www.careersingovernment.com\/tools\/?p=36501"},"modified":"2020-05-03T13:00:45","modified_gmt":"2020-05-03T20:00:45","slug":"how-to-spot-the-sunk-cost-fallacy","status":"publish","type":"post","link":"https:\/\/www.careersingovernment.com\/tools\/gov-talk\/career-advice\/how-to-spot-the-sunk-cost-fallacy\/","title":{"rendered":"How to Spot the Sunk Cost Fallacy"},"content":{"rendered":"

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How to Spot the Sunk Cost Fallacy<\/strong> <\/span><\/p>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ custom_padding_last_edited=”on|desktop” _builder_version=”3.22″ custom_padding_tablet=”50px|0|50px|0″ custom_padding_phone=”” padding_mobile=”off”][et_pb_row column_structure=”1_3,2_3″ column_padding_mobile=”on” custom_padding_last_edited=”on|tablet” admin_label=”row” _builder_version=”3.25″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” max_width=”1200px” custom_margin=”|auto|-95px|auto||” custom_padding=”20px||0px|” custom_padding_tablet=”0px|||” custom_padding_phone=”” use_custom_width=”on” custom_width_px=”1200px”][et_pb_column type=”1_3″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_image src=”https:\/\/www.careersingovernment.com\/tools\/wp-content\/uploads\/2020\/01\/Picture1.png” show_bottom_space=”off” align=”center” align_tablet=”center” align_phone=”” align_last_edited=”on|desktop” disabled_on=”on|on|” _builder_version=”4.0.9″ animation=”off” sticky=”on”][\/et_pb_image][et_pb_text disabled_on=”on|on|” _builder_version=”4.0.9″ text_font=”PT Sans|on|||” text_text_color=”#02b875″ text_font_size=”20″ text_line_height=”1.2em” header_text_color=”#000000″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” text_orientation=”center” max_width=”140px” module_alignment=”center” custom_margin=”20px||0px|”]<\/p>\n

MARIELLA LEA<\/a><\/span><\/p>\n

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Marielle Lea is a content marketer and writer who works to grow her client\u2019s brand awareness through content creation and promotion. She is a passionate creative who thrives on marketing strategy and keeping up with the latest in SEO trends. She currently writes for Coupon Chief on topics related to e-commerce, personal finance, and small business strategy.<\/p>\n

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When it comes to your career, sunk costs are everywhere. To help you spot and avoid them, Coupon Chief created an <\/span>infographic<\/span><\/a> with helpful advice to keep you out of the sunk cost trap. Whether you\u2019re hunting for the next great job opportunity or figuring out how to change careers, it\u2019s important to recognize sunk costs and avoid the fallacy.\u00a0<\/span><\/p>\n

What is the Sunk Cost Fallacy?<\/strong>\u00a0<\/span><\/h4>\n

The sunk cost fallacy is a form of cognitive bias that affects our decisions. It causes us to place value on a decision that we\u2019ve already invested time or money in, even if that decision no longer serves us.\u00a0<\/span><\/p>\n

The sunk cost fallacy can pop up in many areas of life. From your career to finances, there are sunk costs everywhere. Learning how to manage them can make a significant difference in your life, professional growth, and financial success.\u00a0<\/span><\/p>\n

Sunk Costs in Your Career\u00a0<\/strong><\/h4>\n

When it comes to your career and job choices, admitting to mistakes can be tough. However, many people feel regret about their chosen career path at some point in their lives. This regret is a red flag that sunk costs are around the corner.\u00a0<\/span><\/p>\n

Consider this hypothetical example. After graduating college, your parents encouraged you to pursue a career in medicine by attending a prestigious medical school. You have never been especially interested in medicine, but you felt it was important to please your parents. After your first semester in medical school, it\u2019s clear this is not the right path for you. You struggled in your courses and fell to the bottom of the class.\u00a0<\/span><\/p>\n

Unfortunately for you, the money you spent on medical school is not coming back. It\u2019s now a sunk cost, so you should not feel obligated to continue pursuing a medical degree just because you\u2019ve already spent money and time to get into the school. If medical school is not for you, it may be best to cut your losses short and pursue a different career path.\u00a0<\/span><\/p>\n

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When it comes to your career and job choices, admitting to mistakes can be tough.<\/span><\/p>\n

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MARIELLA LEA<\/p>\n

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Why Do We Fall For the Sunk Cost Fallacy?<\/strong>\u00a0<\/span><\/h4>\n

There is a good deal of psychology at play when it comes to the sunk cost fallacy and why we fall for it. Assistant professor at Carnegie Mellon\u2019s School of Business, Christopher Olivola, believes that there is a very specific reason we feel the need to \u201cstick to the plan\u201d when it comes to decisions.\u00a0<\/span><\/p>\n

Olivola cites cognitive dissonance, a phenomena that occurs when we feel remorse after making a decision, as the main reason why we most often fall for the sunk cost fallacy. This cognitive dissonance often leads to defensive behavior and thoughts in regards to an original decision \u2013\u2013\u00a0but this emotional reaction could cause you to continue down a path that clearly isn\u2019t working for you.\u00a0<\/span><\/p>\n

There are other behavioral economic theories that have been linked to the sunk cost fallacy in addition to cognitive dissonance. These include the loss aversion bias and status quo bias.\u00a0<\/span><\/p>\n

The Loss Aversion Bias Theory<\/strong><\/h4>\n

This theory emphasizes that the pain of losing something is twice as powerful as the pleasure of gaining something that is equally valuable to you.\u00a0<\/span><\/p>\n

Let\u2019s look at an example. Which of the following would you most likely choose?\u00a0<\/span><\/p>\n