Quote:
Originally Posted by Tinordi
The analogy is that you've bought a house and it's going down in price, all signs in the market are that the price declines will continue. For a rational agent the proper decision would be to sell the house immediately and cut your losses. For a human decision maker they will most likely choose to hold onto the house and hope that house prices turn around, or they spend more money to renovate the house and try to increase it's resale value. This behaviour is widely observed in behavioural studies and it's what has afflicted the Flames management.
|
Why the hell do I need to read an entire book for that? I'm pretty sure most people are familiar with the "sunk cost" fallacy.