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.)

I'd have to look at actual evidence to answer that question with any degree of authority, and that would take more time than I have right now, but I can sketch an answer...

My source of empirical evidence would be the Go Teaching Ladder, where you get a chance to see higher level players commenting on the inferred thought processes of more novice players. (And more rarely, novice players providing direct evidence of their own thought processes.)

Higher level players tend to recommend "light" play, over "heavy" play: a typical expression is "treat this stone lightly".

Unpacked, this means something like "don't treat this stone as an investment that you must then protect by playing further moves reinforcing your conception of this stone as a living group that must be defended; instead, treat this stone as bait that you gladly abandon to your opponent while you consolidate your strength elsewhere".

"Heavy" play sounds a lot like treating a sunk cost as a commitment to a less valuable course of action. It is play that overlooks the strategic value of sacrifice. See here for some discussion.

However, this is usually expressed from an outside perspective - a better player commenting on the style of a more novice player. I don't know for sure what goes on in the mind of a novice player when making a heavy play - it might well be a mixture of defending sunk costs, wishful thinking, heuristic-inspired play, etc.

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Is Sunk Cost Fallacy a Fallacy?

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Is Sunk Cost Fallacy a Fallacy?

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