Return The Sunk Costs Are Sunk Concept To Principles Of Economics Textbooks

Abstract

The purpose of this paper is to establish a compelling case for the inclusion of the profoundly important “sunk costs are sunk” concept in all principles of economics textbooks.  First, the paper will provide examples of the concept's relevance in political/military decisions.  Second, it will supply business examples of where failure to recognize this concept has led to nearly disastrous results.  Third, it will provide numerous examples of faulty decisions by individuals resulting from the non-application of the concept.   Finally, the paper will provide a psychological explanation for the common failure to properly incorporate the concept into logical and rational decision-making.