When it comes to taking a gamble, whether in a casino or on the stock market, many of us believe we’ll win. Knowing the psychological reasons behind this false assumption can help us on the road to success.
W e don’t always act in a rational way when we make decisions about what’s in our best interests. In fact, if we’re in a bad situation, we can often make it worse by pursuing an unpredictable course of action rather than simply accepting our losses and trying to prevent further damage.
The sunk cost fallacy
If we’ve invested in something that hasn’t repaid us—be it money in a failing venture, time in an unhappy relationship, or chips at ...