Customer Quote by Adam M. Grant
““escalation of commitment to a losing course of action. Over the past four decades, extensive research led by Staw shows that once people make an initial investment of time, energy, or resources, when it goes sour, they’re at risk for increasing their investment. Gamblers in the hole believe that if they just play one more hand of poker, they’ll be able to recover their losses or even win big. Struggling entrepreneurs think that if they just give their start-ups a little more sweat, they can turn it around. When an investment doesn’t pay off, even if the expected value is negative, we invest more. Economists explain this behavior using a concept known as the “sunk cost fallacy”: when estimating the value of a future investment, we have trouble ignoring what we’ve already invested in the past.””
About This Quote
Source Book: Think Again by Adam Grant, 2021
People keep investing in failing projects because past investments bias future decisions, known as the sunk cost fallacy.
In simple terms: Hard to stop spending on losing ventures.
Key Takeaway
Recognize and cut losses early.
Themes
decision making
bias
economics
psychology
Mood
reflective
analytical
cautious
Type
advice
psychology
business
When to use this quote
- business planning
- personal finance
- project management
- investment decisions
Key Concepts
sunk cost fallacy
commitment escalation
Questions to Reflect On
- What investments are you clinging to?
- How can you objectively assess future value?
A Different Perspective
May overlook potential hidden value in continued investment.
