sunk-cost fallacy | ECO 408 Managerial Economics | Ashford University


Please be sure to note that there are several parts to this question — you want to be sure to answer them all. Also, prior to beginning work on this discussion, read Mark Daoust’s article, Sunk-Cost Fallacy: The Real Truth About the Value of Half-Finished Projects (Links to an external site.)Links to an external site.. Now,

1. Why is the sunk-cost fallacy problematic? The key here is not to tell us what the sunk-cost fallacy is (we all know about that now) but to describe why it causes problems in business.

2. Froeb, McCann, Shor, & Ward (2018) suggest that sunk costs can also be variable (rather than just fixed costs). Is this also problematic (do these also cause a problem?) Be sure that you read the text so that you understand what the variable cost version of the fixed cost fallacy represents… it may not be what you think it is!

3. Provide your own example of the sunk-cost fallacy. How would you resolve your sunk-cost fallacy? Discuss this in detail. In other words, what would you do to correctly manage or deal with the sunk-cost fallacy that you have identified?

Your initial post needs to be 300+ relevant words. (In other words, words that do not address the assignment do not count.) Be sure to focus on addressing the questions asked – do not provide definitions unless the assignment specifically requests. You need also to respond to at least two of your classmates’ initial posts with substantive and thoughtful responses of 100+ relevant words (that is 100 words excluding compliments and greetings!)

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