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Too much perseverance
Does our tendency to keep going work in our favour?
“I’ve started so I’ll finish” is one of the first catchphrases that stuck in my mind when we moved to the UK many years ago. At the time, it was uttered pretty much weekly by Magnus Magnusson, the host of the Mastermind quiz programme, in which candidates need to answer general and specialist knowledge questions in quick succession during 2 minutes. Whenever he had begun reading out the last question at the moment the expiration signal is sounded, he continued doing so, and the candidate was then entitled to answer the question.
To me, it sounded not just fair but also entirely reasonable. Nice catchphrase, that also carries an exhortation to persevere: don’t give up. That, however, can lead to a cognitive error known as the sunk cost fallacy, observed particularly in business, where investment decisions regarding large, multi-year projects sometimes need to be revisited.
Avoiding waste
Whether it concerns the development of a potential new oil field by an energy company, or governments funding a supersonic passenger aircraft, the rational way to approach the decision whether or not to continue a project is to totally ignore all the investment to date. The only question that matters is how much it would cost from today onward to…
