Placing a single incident of a "sunk cost" in a larger context, "sunk costs" can serve as a deterrent against abandoning projects.
Sure, but why do you expect people to systematically err in judging when it is time to abandon a project? Unless you have a reason for this, this is buck-passing. ('Why do people need sunk cost as a deterrent? Well, it's because they abandon projects too easily.' 'But why do they abandon projects too easily?' 'Heck I dunno. Same way opium produces sleep maybe, by virtue of a dormitive fallacy.')
This line of thought is why I was looking into hyperbolic discounting, which seems like a perfect candidate for causing that sort of easily-abandonment behavior.
Pretty much every success story I've ever read is of someone who persisted beyond what you might call "the frustration barrier".
Which doesn't necessarily prove anything; we could just be seeing the winner's curse writ large. To win any auction is easy, you just need to be willing to bid more than anyone else... Persistence beyond 'the frustration barrier' may lead to outcomes like 'I am the Japanese Pog-collecting champion of the world.' Well, OK, but don't tell me that's something I should aspire to as a model of rationality!
"Sure, but why do you expect people to systematically err in judging when it is time to abandon a project? Unless you have a reason for this, this is buck-passing."
Because we aren't psychic and can only guess expected payoffs. Why would I hypothesize that we underestimate expected payoffs for persistence rather than the reverse? Two reasons--or assumptions, I suppose. 1. Most skills compound--the better we get, the faster we can get better. And humans are bad at estimating compounded effects, which is why Americans on the whole find themselves su...
I just finished the first draft of my essay, "Are Sunk Costs Fallacies?"; there is still material I need to go through, but the bulk of the material is now there. The formatting is too gnarly to post here, so I ask everyone's forgiveness in clicking through.
To summarize:
(If any of that seems unlikely or absurd to you, click through. I've worked very hard to provide multiple citations where possible, and fulltext for practically everything.)
I started this a while ago; but Luke/SIAI paid for much of the work, and that motivation plus academic library access made this essay more comprehensive than it would have been and finished months in advance.