Decisions About Future Investments—The Sunk Cost Trap
The past is the past. If you lose money, do not bias away from a decision just because you did. In the world of business, every decision must have a reason. Accept that you will lose some money at one point in your venture; no one is perfect.
Base decisions on future pay-offs, not past costs. Imagine your broadband connection has failed and you desperately need to restore it. You have been on hold on the telephone helpline for five minutes, costing 60p a minute. How long do you continue waiting? Keshav is a part-time stock investor. He invested in few stocks, but due to change in economic conditions, his investments have halved in their value. Should Keshav keep them or sell? Look ...
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