Comments on: Sunk Costs

By: rea

rea — Tue, 16 Mar 2004 18:43:19 +0000

“His contract was offered up to anyone who was interested, and given his pre-2002 performance it looked like a good deal for $5 mill. I remember being excited by it at the time. “But wow did it turn out badly. I think it was mostly an injured back.” Brian, what I as a Tiger fan know (and you Red Sox guys evidently failed to note)is that he had major back problems in ‘00 and ‘01. That, of course, was why the Tigers got rid of him. The days when he was arguably worth $5 million were 3 years in the past when the Sox decided to acquire him.

By: Matt Weiner

Matt Weiner — Tue, 16 Mar 2004 00:09:59 +0000

Wouldn’t a lot of arguments for one-boxing in the Newcomb problem translate into arguments for the sunk cost fallacy? Perhaps one-boxing is a marginal position as well. Incidentally, I find this link a more perspicuous explanation of the chain-store paradox; go to #2. It seems a lot like a case David Gauthier discusses in “Assure and Threaten.” I’m not sure whether following through on an unsuccessful threat counts as an example of the sunk cost fallacy—the decision to make a threat isn’t the same as the decision to make a threat and follow through on it.

By: Brian Weatherson

Brian Weatherson — Mon, 15 Mar 2004 23:37:22 +0000

Tom’s not just making the point about reputation. He notes that, and says it can explain some of the experimental data, but he really means to be defending the stronger claim that it can be OK to do X because it makes some past action Y make sense. I was worrying when I wrote that about whethe all arguments against consequentialism (understood as a decision theoretic rather than ethical doctrine) were arguments for the non-fallaciousness of sunk costs reasoning. I wasn’t entirely convinced because I thought there was a difference between (a) choosing a course of action and sticking to it through a decision tree and (b) using sunk costs reasoning to make a decision at later stages. Many anti-consequentialists recommend (a) at various times, but few recommend (b). Few enough that there’s a consensus against sunk costs reasoning by philosophy standards. Since we all never agree on anything, these are very very low.

By: John Quiggin

John Quiggin — Mon, 15 Mar 2004 20:40:05 +0000

Brian, I would have thought there was something close to a 1-1 mapping between arguments for/against paying attention to sunk costs and arguments for/against consequentialism. Since there are lots of people opposed to consequentialism, there should be lots in favour of honouring sunk costs. Turning to Kelly, from your summary, he really seems to be saying that in many cases, costs that appear to be sunk are not, for example, because they are in invesment in reputational capital. Economists have been all over this kind of argument, taking all possible views, for a couple of decades - the locus classicus is the chain store paradox.

By: Brian Weatherson

Brian Weatherson — Mon, 15 Mar 2004 20:13:50 +0000

He wasn’t waived outright by the Tigers. His contract was offered up to anyone who was interested, and given his pre-2002 performance it looked like a good deal for $5 mill. I remember being excited by it at the time. But wow did it turn out badly. I think it was mostly an injured back. From casual observation he still played decent D, and there was no suggestion he was giving less than 100% effort, but he just had no bat power. I remember Bill Simmons writing about how when Clark came up to bat he’d cheer for a strikeout because the only other live alternative was grounding into a double play. It was that bad.

By: rea

rea — Mon, 15 Mar 2004 18:58:07 +0000

Why on earth did the Red Sox contract to pay Tony Clark $5 million, after he was waived by the Detroit Tigers, of all teams? Why didn’t they instead hang on to Scott Hatteburg, for example?