scholarly journals Return The Sunk Costs Are Sunk Concept To Principles Of Economics Textbooks

2011 ◽  
Vol 3 (6) ◽  
Author(s):  
William Young Davis
Keyword(s):  
Decision Making ◽  
Sunk Costs ◽  
Psychological Explanation ◽  
Rational Decision ◽  
Rational Decision Making ◽  
The Common

The purpose of this paper is to establish a compelling case for the inclusion of the profoundly important “sunk costs are sunk” concept in all principles of economics textbooks.  First, the paper will provide examples of the concept's relevance in political/military decisions.  Second, it will supply business examples of where failure to recognize this concept has led to nearly disastrous results.  Third, it will provide numerous examples of faulty decisions by individuals resulting from the non-application of the concept.   Finally, the paper will provide a psychological explanation for the common failure to properly incorporate the concept into logical and rational decision-making.

The Decision to Pollute

1974 ◽  
Vol 6 (1) ◽  
pp. 3-10 ◽  
Author(s):  
R M Dawes ◽  
J Delay ◽  
W Chaplin
Keyword(s):  
Decision Making ◽  
Decision Making Process ◽  
Rational Decision ◽  
Commons Dilemma ◽  
Rational Decision Making ◽  
Pollution Problem ◽  
The Commons ◽  
The Common ◽  
The Individual ◽  
The Mathematical Model

One way of studying the pollution problem is to examine the decision making process in situations in which gain accrues directly to an individual, while loss is spread out across the group of which the individual is a member. Such a situation has been termed a commons dilemma by Lloyd in 1833; it is a variant of the well known prisoner's dilemma. The mathematical model of rational decision making when facing the commons dilemma implies the dismal conclusion that individuals acting rationally will end up by destroying, or nearly destroying, the common wealth. Suggestions are made concerning ways in which people may be persuaded not to pollute our environment.

The Interpersonal Sunk-Cost Effect

2018 ◽  
Vol 29 (7) ◽  
pp. 1072-1083 ◽  
Author(s):  
Christopher Y. Olivola
Keyword(s):  
Decision Making ◽  
Decision Maker ◽  
Sunk Costs ◽  
Rational Decision ◽  
Sunk Cost ◽  
Rational Decision Making ◽  
Social Closeness ◽  
Sunk Cost Effect ◽  
Human Tendency ◽  
Cost Effect

The sunk-cost fallacy—pursuing an inferior alternative merely because we have previously invested significant, but nonrecoverable, resources in it—represents a striking violation of rational decision making. Whereas theoretical accounts and empirical examinations of the sunk-cost effect have generally been based on the assumption that it is a purely intrapersonal phenomenon (i.e., solely driven by one’s own past investments), the present research demonstrates that it is also an interpersonal effect (i.e., people will alter their choices in response to other people’s past investments). Across eight experiments ( N = 6,076) covering diverse scenarios, I documented sunk-cost effects when the costs are borne by someone other than the decision maker. Moreover, the interpersonal sunk-cost effect is not moderated by social closeness or whether other people observe their sunk costs being “honored.” These findings uncover a previously undocumented bias, reveal that the sunk-cost effect is a much broader phenomenon than previously thought, and pose interesting challenges for existing accounts of this fascinating human tendency.

Resource-rational decision making

2021 ◽  
Vol 41 ◽  
pp. 15-21
Author(s):  
Rahul Bhui ◽  
Lucy Lai ◽  
Samuel J Gershman
Keyword(s):  
Decision Making ◽  
Rational Decision ◽  
Rational Decision Making

Author reply: Empathy Does Provide Rational Support for Decisions. But Is It the Right Decision?

2012 ◽  
Vol 4 (1) ◽  
pp. 96-97 ◽  
Author(s):  
Fritz Breithaupt
Keyword(s):  
Decision Making ◽  
Rational Decision ◽  
Author Reply ◽  
Rational Decision Making ◽  
Rational Support ◽  
The One ◽  
The Right

This article examines the relation of empathy and rational judgment. When people observe a conflict most are quick to side with one of the parties. Once a side has been taken, empathy with that party further solidifies this choice. Hence, it will be suggested that empathy is not neutral to judgment and rational decision-making. This does not mean, however, that the one who empathizes will necessarily have made the best choice.

Evidential Decision Theory

2021 ◽  
Author(s):  
Arif Ahmed
Keyword(s):  
Decision Making ◽  
Decision Theory ◽  
Rational Decision ◽  
Evidential Decision Theory ◽  
Radical Theory ◽  
Rational Decision Making ◽  
Evidential Decision ◽  
Theoretic Foundations

Evidential Decision Theory is a radical theory of rational decision-making. It recommends that instead of thinking about what your decisions *cause*, you should think about what they *reveal*. This Element explains in simple terms why thinking in this way makes a big difference, and argues that doing so makes for *better* decisions. An appendix gives an intuitive explanation of the measure-theoretic foundations of Evidential Decision Theory.

Toward More Rational Decision Making

1988 ◽  
pp. 257-283
Author(s):  
Michael R. Gottfredson ◽  
Don M. Gottfredson
Keyword(s):  
Decision Making ◽  
Rational Decision ◽  
Rational Decision Making

scholarly journals The Psychological Puzzle: Contributing Factors to the Top-Down Politicization of Intelligence

Elements ◽  
2016 ◽  
Vol 12 (1) ◽  
Author(s):  
Rebecca Moretti
Keyword(s):  
Decision Making ◽  
Intelligence Community ◽  
Decision Making Process ◽  
Symbiotic Relationship ◽  
Rational Decision ◽  
Contributing Factors ◽  
Political Leaders ◽  
Top Down ◽  
Policy Makers ◽  
Rational Decision Making

Policy and intelligence are intimately intertwined. Policymakers need intelligence to make decisions, while the intelligence community derives significance from its ability to provide policy makers with reliable information. In this symbiotic relationship, it is healthy for intelligence consumers to at times check and direct the work of intelligence producers. However, if undertaken maliciously, this checking mechanism manifests as top-down politicization. Here, leaders use intelligence post facto to legitimize their policies instead of using it to guide them, reversing the rational decision-making process. Certain factors may compel leaders to manipulate intelligence to reflect their policy preferences. This essay demonstrates how three distinct processes of top-down politicization can arise from ambiguous evidence, the psychology of intelligence consumers, and the nature of the leaders’ political positions and responsibilities. It then proceeds to argue that political leaders’ psychology is the most potent source of top-down politicization.

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