016: How to Make Better Decisions: Sunk Cost Bias

16 /02
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016: How to Make Better Decisions: Sunk Cost Bias

We sometimes invest so much time, money, energy and more into something. Whether it be a project, a person or a simple task, it can be hard to admit that it’s just not working out and producing the results you want and need. This is called sunk cost bias, and in this episode I’ll be explaining how it creates a vicious cycle and what questions you need to ask yourself to know whether to keep going in your investments or to start over.

Show Notes

What’s In This Episode:

  • How sunk cost bias influences bad decisions.
  • How fear of failing and being wasteful makes you lose sight of your goals.
  • The easy mindset shift to reverse sunk cost bias.
  • An accounting technique that will help you justify and allocate your time.

What To Do Next:

  • Take a hard look at the things you do in your life that don’t make you happy. Are you just doing them because of sunk cost bias?

 

 

Resources and Links

  • **Correction: Listen to episode 014 (not 015 as mentioned in the podcast): Get Over FOMO: Focus on What’s Important.
  • Pretend you don’t own the item, opportunity or project yet and change the way you question yourself.
    • Item: “How much do I value this item?” vs. “If I did not own this item, how much would I pay to obtain it?”
    • Opportunity: “How will I feel if I miss out of this opportunity?” vs. “If I wasn’t already involved in this opportunity how hard would I work to get on it?”
      • Would you work as hard as you currently are on it or would you say “This is not worth my time”?
    • Project: “Why stop now when I’ve already invested so much in this project?” vs. “If I wasn’t already invested in this project, how much would I invest in it now?”
    • It’s not “If I just keep trying I can make this work,” it’s really about “What else could I do with this time, money, or energy if I pull the plug right now?”

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Sunk cost bias can create a vicious cycle. Learn what questions to ask yourself to know whether or not you should invest your time in something.

Tonya Dalton
Tonya Dalton