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kilobug comments on Is Sunk Cost Fallacy a Fallacy? - Less Wrong

18 Post author: gwern 04 February 2012 04:33AM

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Comment author: kilobug 04 February 2012 10:25:54AM 5 points [-]

Two remarks :

  1. Be careful with the Concorde example. As a French citizen, I was told that the goal of the Concorde never was to be profitable as a passenger service, but it served two goals : public relation/advertising to demonstrate the world the technical ability of french engineering and therefore sell french-made technology (civilian and military planes for example, but also through halo effect, trains or cars or nuclear power plants), and stimulating research and development that could then lead to other benefits (a bit like military research or space program does lead to civilian technology later on). Maybe it was just rationalization and not admitting they felt to the sunk cost fallacy, but as long as I remember, that was the official stance on the Concorde - and on that side, I don't really think it was sunk cost.

  2. I agree with your analysis that sunk cost is useful to counter other biases. I didn't think about the part of young children not committing it, but now that you pointed to studies showing it, it makes perfect sense (and is compatible with my own personal observation of young relatives). So, yes, sunk cost fallacy is useful because it helps us lower the damages done by the planning fallacy and our tendency to be too optimist. But I wouldn't go as far as saying it's not a bias. It's a bias, a "perfect rationalist" shouldn't have it. A bug that partially negates the effects of another bug, but sometimes create problems of its own, is still a bug. So I wouldn't say "sunk cost is not a fallacy" but "sunk cost is a fallacy but it does help us overcome other fallacies, so be careful".

Comment author: gwern 04 February 2012 07:51:12PM 1 point [-]

IMO, the Concorde justifications are transparent rationalizations - if you want research, buy research. It'd be pretty odd if you could buy more research by not buying research but commercial products... In any case, I mention Concorde because it's such a famous example and because a bunch of papers call it the Concorde effect.

I agree with your analysis that sunk cost is useful to counter other biases.

I'm not terribly confident in that claim; it might be that one suffers them both simultaneously. I had to resort to anecdotes and speculation for that section; it's intuitively appealing, but we all know that means little without hard data.

I didn't think about the part of young children not committing it, but now that you pointed to studies showing it, it makes perfect sense (and is compatible with my own personal observation of young relatives).

Yeah. I was quite surprised when I ran into Arkes's claim - it certainly didn't match my memories of being a kid! - and kept a close eye out thenceforth for studies which might bear on it.

Comment author: Strange7 26 October 2014 02:03:14AM 2 points [-]

if you want research, buy research

Focusing money too closely on the research itself runs the risk that you'll end up paying for a lot of hot air dressed up to look like research. Cool-but-useless real-world applications are the costly signalling mechanism which demonstrates an underlying theory's validity to nonspecialists. You can't fly to the moon by tacking more and more epicycles onto the crystalline-sphere theory of celestial mechanics.

Comment author: gwern 26 October 2014 04:21:51PM 0 points [-]

If you want to fly to the moon, buy flying to the moon. X-prizes etc. You still haven't shown that indirect mechanisms which happen to coincide with the status quo are the optimal way of achieving goals.

Comment author: Strange7 28 October 2014 01:11:05PM *  0 points [-]

"Modern-day best-practices industrial engineering works pretty well at it's stated goals, and motivates theoretical progress as a result of subgoals" is not a particularly controversial claim. If you think there's a way to do more with less, or somehow immunize the market for pure research against adverse selection due to frauds and crackpots, feel free to prove it.

Comment author: gwern 28 October 2014 03:58:26PM 1 point [-]

is not a particularly controversial claim.

I disagree. I don't think there's any consensus on this. The success of prizes/contests for motivating research shows that grand follies like the Concorde or Apollo project are far from the only effective funding mechanism, and most of the arguments for grand follies come from those with highly vested interests in them or conflicts of interest - the US government and affiliated academics are certainly happy to make 'the Tang argument' but I don't see why one would trust them.

Comment author: Lumifer 28 October 2014 04:18:09PM -1 points [-]

"works pretty well" is not a controversial claim, but "motivates theoretical progress" is more iffy.

Offhand, I would say that it motivates incremental progress and applied aspects. I don't think it motivates attempts at breakthroughs and basic science.

Comment author: ChristianKl 26 October 2014 06:15:54PM 0 points [-]

IMO, the Concorde justifications are transparent rationalizations - if you want research, buy research. It'd be pretty odd if you could buy more research by not buying research but commercial products... In any case, I mention Concorde because it's such a famous example and because a bunch of papers call it the Concorde effect.

It really depends on your view of academics. If you think that if you hand them a pile of money they just invest it into playing status games with each other, giving them a clear measurable outcome to provides feedback around which they have to structure their research could be helpful.