Success is the result of action. You cannot be successful sitting on the sidelines. Every endeavor requires a bit of work. Recently, I was doing a bit of research on sunk cost fallacy.
Individuals commit the sunk cost fallacy when they continue a behavior or endeavor as a result of previously invested resources (time, money or effort) (Arkes & Blumer, 1985). This fallacy, which is related to loss aversion and status quo bias, can also be viewed as bias resulting from an ongoing commitment.
For example, individuals sometimes order too much food and then over-eat just to “get their money’s worth”. Similarly, a person may have a $20 ticket to a concert and then drive for hours through a blizzard, just because she feels that she has to attend due to having made the initial investment. If the costs outweigh the benefits, the extra costs incurred (inconvenience, time or even money) are held in a different mental account than the one associated with the ticket transaction (Thaler, 1999).
Research suggests that rats, mice and humans are all sensitive to sunk costs after they have made the decision to pursue a reward (Sweis et al., 2018).
Sunk costs are also apart of human relationships.
I see this frequently with real estate investors that have joined real estate clubs or gurus, but have not experienced the success their mentors promised. It sounds something like this.
“I would love to join The Mastermind but I joined XYZ real estate club and I am a student of John Doe’s super duper fast track income wealth elite platinum inner group.” And my response is always the same “Is it getting you the results you want.” And their response is always the same – “no but I am just going to keep working their system and it will turn around.” It rarely does.
Stop doing stuff that isn’t working, stop investing – time, money and effort – in things that just are not working. We have a special on our mastermind – join before the end of the year and we will add an additional 3 months to your membership. We have space for 5 more folks. Join now and start changing your future. Reply to this email.
Finally, I want to thank everyone that responded to my last email Real Estate and Relationships. It was one of the most popular emails I have ever sent. The number of thoughtful responses I received was unexpected and humbling. We all go through seasons in life and I thought it would be ideal if I shared my most recent one.
You can read an archived version here – https://myemail.constantcontact.com/Real-Estate-and-Relationships.html?soid=1130246352459&aid=0sTDolNOHl0
Oh yeah, sunk costs are a thing, and they can indeed prevent you from letting go on failing ventures. That’s why it’s important to take stock of your life every day, so that you can evaluate what’s good for you, instead of waiting until it’s too late and realising that you’re in to deep.
And even then, you still have to choice to make something of it today.
Thanks for this post!