{"id":84060,"date":"2023-11-22T02:00:43","date_gmt":"2023-11-22T07:00:43","guid":{"rendered":"https:\/\/quotulatiousness.ca\/blog\/?p=84060"},"modified":"2023-08-06T15:17:04","modified_gmt":"2023-08-06T19:17:04","slug":"marginal-thinking-and-the-sunk-cost-fallacy","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2023\/11\/22\/marginal-thinking-and-the-sunk-cost-fallacy\/","title":{"rendered":"Marginal Thinking and the Sunk Cost Fallacy"},"content":{"rendered":"<p align=\"center\"><iframe loading=\"lazy\" width=\"854\" height=\"480\" src=\"https:\/\/www.youtube.com\/embed\/B9MPklfyRHI\" title=\"YouTube video player\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" allowfullscreen><\/iframe><\/p>\n<blockquote><p><strong>Marginal Revolution University<\/strong><br \/>\nPublished 1 Aug 2023<\/p>\n<p>Thinking on the margin is one of the most fundamental concepts in economics \u2013 and a valuable everyday tool for making optimal decisions. <\/p>\n<p>For such an important idea, the meaning of marginal thinking is surprisingly simple: when faced with a decision, you should compare the marginal benefit of a possible action to its marginal cost. If the marginal benefit is greater than the marginal cost, do it! <\/p>\n<p>Marginal thinking is best illustrated by some examples of everyday decisions. The volume you choose when you watch TV, the pricing strategy of a clothing shop, or even the decision to walk out of a boring film are all informed by marginal thinking.<\/p>\n<p>The &#8220;Sunk Cost Fallacy&#8221; is a common failure to apply marginal thinking. Focusing on past decisions \u2013 the price we paid for an item, the time we&#8217;ve already invested in a relationship \u2013 can lead us astray. We can&#8217;t change the past, so only the potential marginal benefit and marginal cost of the next possible action are relevant to decision-making.<br \/>\n<!--more--><\/p>\n<p>Get our FREE Intro to Economics unit plan: <a href=\"https:\/\/mru.io\/y7r\" rel=\"noopener\" target=\"_blank\">https:\/\/mru.io\/y7r<\/a><br \/>\nContinue learning with practice questions: <a href=\"https:\/\/mru.io\/8ya\" rel=\"noopener\" target=\"_blank\">https:\/\/mru.io\/8ya<\/a><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Marginal Revolution University Published 1 Aug 2023 Thinking on the margin is one of the most fundamental concepts in economics \u2013 and a valuable everyday tool for making optimal decisions. For such an important idea, the meaning of marginal thinking is surprisingly simple: when faced with a decision, you should compare the marginal benefit of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":35193,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[831,79],"tags":[1026],"class_list":["post-84060","post","type-post","status-publish","format-standard","hentry","category-business","category-education","tag-microeconomics"],"jetpack_featured_media_url":"https:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2016\/06\/favicon.png","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-lRO","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/84060","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=84060"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/84060\/revisions"}],"predecessor-version":[{"id":84061,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/84060\/revisions\/84061"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media\/35193"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=84060"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=84060"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=84060"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}