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9.5: Sunk Cost Effect

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    Sunk cost is a term used in economics referring to non-recoverable investments of time or money. The trap occurs when a person’s aversion to loss impels them to throw good money after bad, because they don’t want to waste their earlier investment. This is vulnerable to manipulation. The more time and energy a cult recruit can be persuaded to spend with the group, the more “invested” they will feel, and, consequently, the more of a loss it will feel to leave that group. Consider the advice of billionaire investor Warren Buffet: “When you find yourself in a hole, the best thing you can do is stop digging” (Levine, 2003).

    This page titled 9.5: Sunk Cost Effect is shared under a CC BY license and was authored, remixed, and/or curated by Mehgan Andrade and Neil Walker.

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