Read the topic of Sunk Costs and Opportunity Costs and the Focus on Ethics, Fumbling Sunk Costs.
First, answer the question “What safeguards could a firm use to remove such a bias from recommitment decisions?”
Second, thinking about your own personal financial decisions, what are some sunk costs you wish you could change? Have you fallen into the trap of throwing more time and money into a project in the hopes of recovering your sunk costs? Do you normally consider the Opportunity Cost (and benefits) of doing something new when making your decisions? Please give us an example from your life.
