
Ignore sunk costs - terpua
http://sethgodin.typepad.com/seths_blog/2009/05/ignore-sunk-costs.html
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shizcakes
I disagree with the internet-famous business writer and speaker. You can't
blindly ignore sunk costs. You need to consider them to determine your
ultimate return on investment, and you should consider them when opportunity-
cost doesn't give you more appropriate answer, such as in this example:

"Or say you make a mistake and go to the concert instead of selling (those
seats are $500 seats now). But Bruce is sick and Manfred Mann is substituting
for him. You don't like him so much. But you paid $500 for the seats! Should
you stay?"

Do you hate Manfred Mann? Will staying improve your feeling of happiness and
satisfaction rather than leaving, when you look back on the night in two
weeks?

I think what Seth is actually tying to say is: "When calculating the
opportunity-cost of a decision, your emotional attachment to the money you
have previously invested is not generally part of the equation", and "Base
your decisions on opportunity-cost, not on sunk costs", which is sound.

Finally, will spelling the word on the sign correctly actually help the
convenience store owner? Do people visit convenience stores based upon
branding and proper lettering, or do they visit them because they are
available or convenient? Your sunk cost has gotten you a sign. Is there
another investment with a greater return than redoing the sign?

