I’m reading through a book right now called “Essentialismâ€, and apart from being a really helpful book, it is also full of several anecdotes, illustrations, etc. One of them has really struck me and stuck with me. There is a term called “sunk-cost bias†and the basic idea of it is that once we’ve invested our resources into something, we tend to have an irrational loyalty to it, despite the fact that the continued pursuit or investment isn’t solvent, is a wasted ventured, or is heading towards disaster.
This is why casinos work so well, because they exploit this irrational tendency to continue to invest in 
something, even though we’re losing money and gaining nothing, simply because we’ve invested in it. The classic example of this was the Concord planes that Britain and France built; it became clear very quickly that these planes cost more to build, run, and maintain than they were worth. The market was never there, and never would be there and still the governments continued to prop these planes along, despite continuing and increasing losses. [Read more…] about Our Old Rag Collection
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