The Sinking Cost Effect On Society Essay

1648 Words May 7th, 2016 null Page
In Chapter Eight, the textbook mentions how “the sunk cost effect is a tendency to continue an action once an investment in money, effect, or time has already been made” (Chapter 8, pg. 85). The textbook also mentions how, “sunk cost thinking can lead individuals to throw good money after bad, leading to an escalation of commitment” (Chapter 8, pg. 86). In other words, this means that an individual pays a certain amount of money to attend an event that they thought would be fun to attend, however; in reality the event did not meet up to his or her expectations. Since the individual already invested money into attending this event, the individual continues to stay instead of leaving. This could be because, the individual already paid for the event that was costly to get in so the individual does not want to waste money that was already wasted so the individual stays at the event and possibly wastes more money on food, drinks, entertainment that in reality does not meet up to the individuals needs or wants. A real life example would I went on vacation trip with my fiancé’ and we thought the hotel we were going to stay at was going to be good, however; in reality it was a decent hotel but did not really meet up to our expectations. We ended up staying at the hotel since we were only going to stay for a few days and most likely not be at the hotel while we are on vacation. We also already paid for us to stay there so we did not want to waste any more money trying to find another…

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