The Sunk Cost Fallacy: Know When To Quit.
Let’s say you’re planning your next summer vacation. So you hit google and find a few different destinations you’d like to visit this year.
You find a trip to Egypt, a country you’ve always wanted to visit, but it’s not on top of your list. The travel package includes a plane ticket and a stay at a hotel for a total of $3000. This package is non-refundable, but you couldn’t find anything better, so you went for it and booked the trip.
The next day you do some more googling and voila, you find another amazing deal to Costa Rica, your most desired destination. The travel package also comes with a plane ticket and includes a stay at a luxurious resort.
To top it off, they have a special running for just $1000. Wow !! (mind-blown)
Again, the ticket is non-refundable. But since you’ll be taking two separate breaks this summer, you decide to book this trip as well.
So far, so good. You get two vacations trips to two places you’ve always wanted to go including your favorite destination at a heavily discounted price.
Later that day you’re horrified when you realize that you’ve made a huge mistake. You accidentally booked the trip to Costa Rica the same week as your trip to Egypt. Unfortunately, both bookings are nonrefundable, the hotels are full and you can’t even change the dates.
And now comes the big tough choice. Do you go to Egypt or do you go to Costa Rica? You start weighing your options.
If you go to Egypt, you’d only lose out on the $1000 you paid for Costa Rica. But if you go to Costa Rica, you’d have to swallow a loss of $3000 that you paid for the trip to Egypt.
You know that in Egypt you’d have a nice time and only lose the $1000 you paid for Costa Rica, but if you go to Costa Rica, you’ll have an amazing time but you will lose the $3000 that you paid for Egypt. What to do? What to do? You scratch your head.
So which do you pick?
About 50% of the people who respond to this question say that they would go to Egypt and it’s easy to see why. The trip cost more money. Even though they…