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Spot The Sunk-Cost Fallacy And Know When To Quit

Posted in Psychology

The sunk cost fallacy applies to all of life’s investments.

In poker, an unlucky hand, an opponent’s provocation, general impatience, or bad luck may drastically impair a player’s decision making process. Regardless of ability or experience, when this is extreme, a player takes high-risks or consistently makes irrational moves, in a futile attempt to chase losses. In game terminology, this psychological trap is called tilt.

The tilt mindset influences more than just financial investments. We invest in a multitude of ways; be it with time, emotions, creativity, or physical energy. In any situation, decisions may be impaired thanks to the accumulation of investments made, just like the poker player on a losing streak, spewing chips when the odds aren’t in favour.

Psychologists call this cognitive bias the sunk-cost fallacy. Away from gambling, it’s difficult to spot because success is linked with stories of unrelenting determination and a “never-say-die” attitude. Quitting equates to weakness. If you really want to succeed, never, ever give up!

But sometimes quitting is the best decision. In any venture, the refusal to quit can become a hindrance to success, growth, or progress. It takes a calm, measured assessment of a present situation to spot the sunk-cost fallacy. Pride, stubbornness, guilt or fear are some egoic traits motivating us to continue on a set path, even when the signs point in a new direction.

Honesty and knowing when to quit

A challenging relationship taught me the suffering caused by a refusal to quit. I’d invested so much emotion, time, energy and daydreams of perfect futures, I felt the relationship had to work. I’d created a fantasy I was attempting to make reality, despite signs indicating the relationship was over. The sunk-cost fallacy caused me to hold on, when all I needed to do was let go.

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A storyline developed. I told myself I’d only be happy when we were together, in the same city, three years in the future. It dawned on me that I was holding on to the belief she was “the one,” and we were destined to be together, no matter what. Quitting was far from easy. But as I slowly sobered from the intoxication of what could’ve been, it became clear my decision was based on a “what if,” not the truth of the situation.

Awareness of the sunken-cost fallacy adds clarity to such decisions. We can then choose investments wisely, based on our present understanding, not an outdated notion or chasing of metaphorical (or literal) losses. This takes an honest assessment, like the poker player who knows when to call it a night.

I encourage you to ask yourself — where am I investing time, money, or energy, based on investments already made, rather than based on the present reality?

This conscious approach uncovers investments that have become stale. Without curiously exploring, much goes unquestioned. Yet we only have a limited amount to invest, and creating a dynamic and value-filled life means consistent assessment to align to the “what is” rather than the “what was” or “what could be.”

Flexibility and opportunities to learn

Every investment provides opportunity to learn. Quitting doesn’t erase experiences gained along the way — with a mind primed for growth, those lessons are injected into new investments as we learn to spend our time, money, energy more wisely. In this way, quitting adds flexibility to our lives, allowing us to view new opportunities with fresh eyes.

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Impermanence (annica in Buddhism) is a universal truth. Everything is in constant flux, all is transient. The Buddha taught increased well-being, harmony and reduced suffering are possible when we allow greater flow into our lives. Embracing impermanence allows the old to leave gracefully, providing room for the new.

Quitting can be viewed as failure. Or it can be viewed as letting go to create space for the infinite potential of new opportunities, people, or experiences closer aligned to the person we are becoming. With limited energy, letting go of what no longer serves us allows us to invest in what does.

Quitting takes courage, especially when it closes the door of familiarity and opens the door of unknown possibilities. But when enacted skilfully, quitting is an act of faith — in ourselves, and in the universe.


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2 Comments

  1. Anonymous
    Anonymous

    Quitting to things that doesn’t serve you anymore! What a thought! I super like it. I needed it most of this time 🙂

    June 29, 2019
    |Reply
  2. Bonielyn
    Bonielyn

    Quitting to things that doesn’t serve you anymore! What a thought! I super like it. I needed it most of this time 🙂

    June 29, 2019
    |Reply

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