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WorksheetsSunk Cost Fallacy Quiz
Total questions: 10
Worksheet time: 5mins
Give three examples of sunk cost fallacy.
continuing to pour money into a failing business, staying in a bad relationship because of the time already invested, and refusing to sell a losing stock because of the initial purchase price
investing more money in a failing project because of the time already spent
buying a new car because the old one needs repairs
continuing to eat at a bad restaurant because you already paid for the meal
Explain three ways to avoid sunk cost fallacy.
Keep investing more money to justify previous investments
Ignore future costs and benefits
Refuse to seek advice from others
Focus on future costs and benefits, seek advice from others, and be willing to cut losses and move on.
What are the psychological factors behind sunk cost fallacy?
Anchoring effect
Loss aversion, cognitive dissonance, and the desire to justify past decisions
Overconfidence bias
Fear of missing out
How does sunk cost fallacy affect real-life decision making?
Causes individuals to continue investing in a losing proposition
Has no impact on decision making
Leads to rational decision making based on future potential gains
Encourages individuals to cut their losses and move on
Provide three examples of sunk cost fallacy.
Continuing to eat at a restaurant with bad food because you already paid for the meal
Staying in a bad relationship because of the time already invested
1. Continuing to repair an old car because of the money already spent on it. 2. Finishing a book or movie that you don't enjoy because you've already invested time in it. 3. Holding onto a losing stock because you don't want to sell at a loss.
Buying a new phone because the old one is not working well
What are some strategies to overcome sunk cost fallacy?
Reassess the situation objectively, seek advice from others, focus on future costs and benefits, and be willing to cut losses.
Double down on the current investment
Ignore future costs and benefits
Refuse to seek advice from others
Discuss the psychological factors that contribute to sunk cost fallacy.
Self-serving bias, fundamental attribution error, and illusion of control
Loss aversion, cognitive dissonance, and commitment bias
Anchoring effect, availability heuristic, and overconfidence bias
Confirmation bias, risk aversion, and hindsight bias
What are the potential real-life consequences of succumbing to sunk cost fallacy?
Wasting time, money, and resources on a project or decision
Gaining more time, money, and resources on a project or decision
Avoiding any negative consequences
Making a successful investment
Can you provide examples of sunk cost fallacy?
Continuing to work on a project because of the potential future benefits
Ending a relationship because of the time already spent
Yes, examples of sunk cost fallacy include continuing to pour money into a failing business or project because of the amount already invested, or staying in a bad relationship because of the time already spent.
Investing more money into a successful business
How can individuals avoid falling into the sunk cost fallacy trap?
By doubling down on the current investment
By focusing on future costs and benefits rather than past investments.
By seeking advice from someone who has already fallen into the trap
By ignoring future costs and benefits
