Have you ever invested in a particular person or thing and felt as if you could never back out of that decision? Well if this makes you feel any better, you are not the only one. There are many individuals who have placed a huge investment in someone or something and felt the loss of their time, effort, or even finances in that investment. The result of that investment may have been heart-wrenching and cause regrets in life. You may have felt that you have lost time and money. It is never too late to weigh your options and act on your decisions wisely.
First, we will discover a theory called Sunk-Cost Effect. Sunk-Cost Effect Theory is an important theory that everyone will embark on in their lifetime. Sunk-Cost Effect Theory developed by theorists Arkes and Blumer (1985) explained that once the decision maker has placed much time, effort or money into a decision, they are reluctant to give up on their investment Arkes, et al, 1985).
Second, giving up on something you placed time or even money into would not be an easy thing to give up. For instance, a student who discovers that college is not right for him or her would be less likely to walk away from what he or she perceives as an investment for the future. In Sunk-Cost Effect Theory, the student is in their sophomore year of college and therefore may feel reluctant to enter another program specializing in a vocational trade. Are you like the student who feels they should continue with college even though they may not be successful at it? Are you the individual that has the willpower and confidence to pursue something that may be a wise investment for your future? Remember that the decisions made today will greatly impact your future.
In general, Sunk Cost Effect Theory for decision makers may be a tough ordeal; however, the decision must be made on the overall effect of the decision. Sometimes it is better to walk away from an investment that may not be worth it in the end, than sticking to an investment that may cause further harm and regret.
Arkes, H. and Blumer, C (1985) The Psychology of Sunk Cost. Organizational Behavior and Human Decision Processes 35, 124-140