The Sunk Cost Fallacy: Knowing When To Walk Away

by Dan Johnston

The Sunk Cost Fallacy: Knowing When To Walk Away

 

It’s really hard to change direction, but what you’ll likely find is – when you do, you feel immense relief and, ultimately, things work out a lot better.

How do you know when to walk away from a bad relationship, unsatisfying career, or a huge investment?

How do you know when to change direction and make a cold break, move onto something new, and really just…walk away?

Making tough decisions is a really difficult thing to do for everybody, but I think especially for ENFPs and INFPs, because we are so open to possibilities and, due to this, we can sometimes be very indecisive.

ENFP and INFP personalities are actually all about the possibilities, solutions and finding ways to make things work, so just to say “No, that’s not working.” or “No, I don’t want to do this.” is not really aligned with us.

The Sunk Cost Bias: What is it?!

If you spent much time learning about psychology or poker, for that matter, you’ve probably heard the term the sunk cost fallacy or the sunk cost bias.

This is a cognitive bias in decision making. It is when people tend to make bad decisions because we evaluate our current decision based on our past decisions and what we’ve invested in terms of time or money, even if that time or money is already lost.

In the video above I’m talking about the investment I was looking at in Ukraine throughout the past year, which did not work out.

This experience was the inspiration for this video and what really made me think about the sunk cost fallacy. It is also what I’d use as a sunk cost example to help really convey what this actually is and how I went about it, as well as share some valuable advice for ENFPs and INFPs on how to make better decisions.

By the time I and my INTJ partner were getting to the investment part, the big signing and all that. on my end, I’d probably put in somewhere between $2,000-$3,000.

Was it all for nothing?

One of the things that can pop into your head is:

“Hey, I’ve already put X amount of dollars into this, right? I’ve put all this time. I’ve been to Ukraine twice. I’ve lost effort and time I could have put into other things. And so I don’t want to lose that if I walk away!”

Maybe you’ve been in a relationship for two years and you fight a lot and things aren’t perfect, but you started the relationship when you’re 27 and you’re now 29. You’re thinking to yourself:

“I gave this person two years of my 20s. That’s prime dating time. Do I really want to have wasted that time?! Maybe we can find a way to make it work, right?”

It’s the sunk cost. We feel like we’ve invested something and we don’t want to have lost that so badly!

This can be really, really hard to accept. There’s a natural bias we have to consistency, to moving in the same direction, and momentum can be really powerful – and really dangerous.

The Right Time To Call It Quits

If you do find yourself in a situation, whether it’s a relationship, business partnership, some kind of investment, or anything else that you’ve been doing, where you feel like you’re trapped and everything in you screams:

“I shouldn’t be doing this. This is not the right move. This feels like too much work or like there has to be a better way to do things!”

Don’t feel like you are trapped.

Don’t feel like you have to keep going.

It might be really difficult to change direction and make this hard choice, right? It’s like a giant freighter ship.

I did mention the relationship example, but this may happen in your career as well!

“I’ve invested this much money or time in law school or in my career and I can’t change!”

I get it. It’s a huge investment, but hear me out in the video above. You CAN change your life by changing the direction here.

Watch the video above for some advice on how to deal with this and then let me know in the comments below:

Was there a time in your life when you felt like you couldn’t change the direction and that you couldn’t walk away – and then you’ve made a difficult decision and did it anyhow? How did you feel after that? How did that work out?

Want To Learn More? I Have a Free Course For You!

You will never live your best life until you design it around yourself and your own personality type!

In The Life Design Approach, my free 9-part email course, you will get to:

  • Learn the philosophy that helped me become time and Location Independent, live in 7 countries and publish 12 books before I turned 30
  • Discover exactly how you can design the life of your dreams for you and those you love
  • Receive my best ideas, advice, training, and programs

Claim Your Free Life Design Approach e-mail course now! 

 

 

 

If you liked this article don't forget to share it with your friends.

Leave a Reply

Your email address will not be published. Required fields are marked *