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Social Studies skills: Difference between revisions
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*** this dynamic can explain why people may feel great about some outcome yet fail to repeat it subsequently | *** this dynamic can explain why people may feel great about some outcome yet fail to repeat it subsequently | ||
**** they expect that same extreme/outlier without realizing that outcomes will likely "regress to the mean" | **** they expect that same extreme/outlier without realizing that outcomes will likely "regress to the mean" | ||
=== Sunk cost fallacy === | |||
* "sunk cost" is an economics term for a transaction or financial cost that can no longer be recovered | |||
** i.e., it is "sunk" | |||
* the "sunk cost fallacy" is that because a cost has been incurrent but not recovered, more investment is required to make it back | |||
** also known as "throwing good money after bad" | |||
* the sunk cost fallacy results from an emotional response to a bad situation | |||
** in which it would be irrational to continue to incur additional costs | |||
* the opposite response to the sunk cost fallacy is "cutting one's losses" and moving on | |||
* in non-financial analysis, especially historical, the sunk cost fallacy occurs when actors "double down" on a bad decision or situation | |||
** doubling down has frequently occurred in politics and warfare | |||
* related to Loss Aversion | |||
=== Sutton's law === | === Sutton's law === | ||