dealing with uncertainty and the risk of relying on some people’s
natural optimism.
Sunk Costs
In the language of economics, sunk costs are investments of time or
money that cannot be recovered. Sunk costs are about the past, but
people sometimes make the mistake of allowing sunk costs to influ-
ence decisions about the future. Consider this example:
Phil has paid $50 for a ticket to a concert featuring his favorite blue-
grass band.Two hours before the concert begins, his boss calls to say that
the board of directors meeting has just ended and they are going out to
dinner.“I’d like you to join us,” says the boss.“This is a great opportu-
nity for you to ...