INST 354 Lecture Notes - Lecture 16: Sunk Costs, Robert Trivers, Parental Investment

• School: University of Maryland
• Department: Information Studies
• Course: INST 354
• Professor: Anton

Document Summary

Another reason that some apparent sunk cost ventures may not be irrational is that the decision makers are choosing actions to project and preserve their reputations for being decisive or for not being wasteful. If, indeed, abandonment of a sunk cost negatively affects future reputation, then it may be wise not to do it. The auto maker who abandons the edsel may be derided for making a. Gutless decision and lose future clout and actual power within his or her organization. The skier who gives up after having already paid may be regarded not just as financially wasteful, but as confused or silly, and lose his or her friends" respect. Such future reputational costs are perfectly reasonable factors to consider in determining whether or not to abandon a particular course of action (see figure 2. 5). But the sunk cost per se should not be a factor.