What is Sunk Cost theory?
Sunk cost in monetary terms is a cost that has already been paid and cannot be recovered.
We've all had that feeling that we've paid for something, so should use it (even when it's not very useful, we don't want to, or don't even like it) - let me illustrate with a few examples.
I have a real problem with wasting food once I've paid for it (especially when it's my five year old who is doing the wasting) so often even when I dislike something, or I'm full, or it wasn't even my food in the first place, I'll finish it regardless making me feel not so very great.
So why do I do this? I don't like the idea of waste and the food isn't going to be recycled or given to anyone else, it's just thrown out. It's also that feeling of not wanting the money I've spent to go to waste - but I've already spent it, it's gone, it' a sunk cost that should be just accepted.
Another fine example is renting a movie from amazon. Unlike the programmes and movies that are free where if I start watching then decide it's not for me, I just switch over; once I've paid for it, I feel obliged to see it through to the end to satisfy that feeling of getting my money's worth. The exact same in the cinema of at the theatre or gig - I wonder how many hours of my own time I've spent watching performances that were truly terrible to make myself feel like I've gotten my money's worth? There's also the element of invested time 'well I've watched an hour of it already so I should just see it through to the end...' I'm cringing thinking about the better ways I could have spent my time if I was really thinking it through.
A lovely add on to time is an emotional investment to a certain way of doing something, like spending lots of time setting up a new system in your business. As an ex-teacher, I have done this many times when new initiatives have come in, and even though they have been time consuming to use and not very efficient, I have been extremely reluctant to give them up and move to something better, because I had already ploughed so much time and effort into setting it up, learning how to use it, and routinely updating it. I simply didn't want to detach from the system and repeat it all with something brand new (even though it was undoubtedly the smart move in the long run)
I have now accepted that like so many other people, I really get sucked into the sunk cost fallacy, and it took a great deal of thought and restraint to not eat that final chilli cheese bite at the restaurant yesterday, but it was a step on the road to recovery.