The sunk cost fallacy

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The sunk cost fallacy

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I recently came across David McRaney’s post about the sunk cost fallacy with reference to Farmville, a fallacy that is very applicable to software.

David starts off with the following statements which describe the fallacy pretty well:

The Misconception: You make rational decisions based on the future value of objects, investments and experiences.

The Truth: Your decisions are tainted by the emotional investments you accumulate, and the more you invest in something the harder it becomes to abandon it.

I think this is very true in a lot of IT organisations in particular when they’ve made a big investment on some sort of middleware, usually an ESB.

These can often cost hundreds of thousands if not millions of £’s so the person who authorised the purchase is likely to push very hard for it to be used because if it’s not then their decision looks very foolish.

The problem is that in a lot of cases using an ESB doesn’t simplify the system being built – it makes it much more complicated.

ESB’s are typically difficult to test against, difficult to setup on a continuous integration server and generally make the life of people who have to use them hell.

The sunk cost fallacy applies here because the organisation feels the pain of the initial purchase and doesn’t want to write that off even if it would make life easier for them from now onwards.

I even have my own smaller example from something I’ve been working on over the weekend.

I wanted to try moving this blog from WordPress to Jekyll and I came across octopress which simplifies the process by providing ready made style sheets and layouts.

I’ve got it mostly working but I couldn’t work out how to create pages which showed the posts in certain categories or for a specific month.

From what I can tell you can get that functionality by implementing a plugin but unfortunately plugins were only added to Jekyll from version 0.6 and octopress relies on henrik-jekyll version 0.5.

I’ve spent about a day and a half getting the blog to its current state so I’m pretty reluctant to write off that time and scrap the octopress idea.

Unfortunately that may not be possible if I want to get all the functionality of wordpress.

I’m not sure exactly when we should take the sunk cost and when we should write it off but being aware of it is at least a step in the right direction.


From http://www.markhneedham.com/blog/2011/04/17/the-sunk-cost-fallacy/


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