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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 3 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.