Don’t let sunk costs affect your choices

There is a concept I learnt from Finance: Sunk Cost. Sunk Costs are investment of time, energy and money that can’t be recovered once they’ve been made. No matter what you will do, you will not recover the sunk costs.
Even if this seems easy to understand, we often make our future decisions victims of the sunk cost fallacy. We continue to invest more time, energy and money in something that is not worth it, just because we already spent so much and these sunk costs affect our choices.

Instead all that matters is how much more investment is required versus the reward you expect to obtain.

I give you an example:

Time ago I’ve I booked a flight to London. It was one month before the departure. Some days before I didn’t feel very well so I decided to do not go. I might have taken the flight , but I thought that If I had gone to London, the additional investment in time, energy and money would have been much higher that the expected reward in enjoying the city. The reaction of my friends was: “Are you mad? You have already spent the money for the flight!”…  They were under the sunk cost fallacy. I knew that in my situation I wouldn’t have had a good time in London and I didn’t let the sunk costs affect my choice.

Unfortunately our life is full of examples of the sunk cost fallacy, we should recognize it and don’t let the sunk costs affect our choices.

I just finished my personal MBA

I just finished reading the book “The personal MBA – master the art of business” of Josh Kaufman. I found it really interesting and well structured. You can use it as starting point for your curiosity and as a reference on the many concepts and principles around Business. Recommended reading for curious minds that understand that this a high-level overview.

“You wasted $150000 on an education you could have got for a buck fifty in late charges at the public library”
– Matt Damon as Will Hunting, Good Will Hunting.

Change…

There is nothing as powerful as a changed mind…

About importance of reading

We badly need to incentivize listening. And online, listening = reading. That old school program from my childhood was right, so deeply fundamentally right. Reading. Reading is Foundamental.

Let’s say you’re interested in World War II. Who would you rather have a discussion with about that? The guy who just skimmed the Wikipedia Article, or the gal who read the entirety of The Rise and Fall of the Third Reich?

If you’ve posted five times in the last 10 years, but you’ve read every single thing your community has ever written, I can guarantee that you, Mr. or Mrs. Lurker, are a far more important part of that community’s culture and social norms than someone who posted 100 times in the last two weeks. Value to a community should be measured every bit by how much you’ve read as much as how much you talked.”

– From “Because Reading is Foundamental” at CodingHorror Blog