When I consider selling a stock,
my financial adviser
always brings up
the price I bought the stock at.
I don’t care about that price.
It is in the past,
a sunk cost,
and my decision to sell or not
depends on my outlook for the future.
That’s how we should
feel about decisions also.
Past decisions are sunk decisions.
We can’t change them.
Today’s decision is based on new information,
new circumstances.
It should be looked at
with fresh eyes.
Unfortunately,
studies say that
we don’t do this.
“When the same person responsible
for the disappointing first strategy
was given the power
to decide the next move,
it was much more likely
that they would choose
to stay the course.
They were predisposed
to escalate the commitment
because to do otherwise
would be to admit a mistake.”
The solution?
When a project doesn’t work,
either switch project managers
or have the decision to continue/kill projects
depend upon another person.