Is Sunk Cost Fallacy a Fallacy?

gwern

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:

sunk costs are probably issues in big organizations
- but maybe not ones that can be helped
sunk costs are not issues in animals
they appear to be in children & adults
- but many apparent problems can be explained as part of a learning strategy
there are few clear indications sunk costs are genuine problems
much of what we call 'sunk cost' looks like simple carelessness & thoughtlessness

(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.

To summarize:

sunk costs are probably issues in big organizations
- but maybe not ones that can be helped
sunk costs are not issues in animals
they appear to be in children & adults
- but many apparent problems can be explained as part of a learning strategy
there are few clear indications sunk costs are genuine problems
much of what we call 'sunk cost' looks like simple carelessness & thoughtlessness

(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.)

novice Go players do things such as adding stones to an already dead group which are clearly identifiable as instances of the sunk cost fallacy,

I don't think this is correct. Novice players keep adding stones because they don't realize the group is dead, not because they can't give up on it.

That's probably right at higher kyu levels, when you really have no good grasp of group status.

When you ask a novice "what is the status of this group", though, there is typically a time when they can correctly answer "dead" in exercise settings, but fail to draw the appropriate conclusion in a game by cutting their losses, and that's where I want to draw a parallel with the sunk cost fallacy.

This is similar to life situations where if you'd just ask yourself the question "is this a sunk cost, and should I abandon it" you'd an... (read more)

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Is Sunk Cost Fallacy a Fallacy?

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Is Sunk Cost Fallacy a Fallacy?

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