by Tanvi Mahajan
We all have this one friend who is in a dreadful relationship with someone whom we think they aren’t compatible enough with and we constantly keep questioning them as to why they won’t give up the relationship. And one fine day, we finally put the question forth for them to answer, only to find out that they are hopeful that the person will change, or the classic, “I’ve been with him/her for so long, I’ve known him/her forever…”
Even when you remind them of the teary times or the constant fights, it all goes back to, “but we do have good times too.” People display naivety which is often known as the sunk cost effect (SCE).
SCE is popularly known as the human tendency to continue investing in something that clearly isn’t working, but have we ever considered the psychological processes it involves? Have we ever questioned why people intend to keep investing, why they stay in an abusive relationship, why people tend to lose millions in casinos? WHY?
Human beings are supposed to be the most advanced species who view themselves as operationally and undoubtedly rational, constantly making deductions and decisions on the actual or future valued objects, investments and experiences. But in reality, human behavior is far from that. Humans are often governed by the emotional investment that they have made over time, which includes the economical investments that maybe have grown and the amount of time spent nurturing the emotional aspect along with economical one.
Thus, as the sum of all investments increase, the effect of SCE gets stronger.
Emotions+ Monetary x Time= SCE
The major reasons of SCE are:
- Escalation of commitment.
SCE is displayed in this classic experiment. When 2 groups are given an option A – 90% has been invested and 10% is to be invested and option B – 10% is invested whereas 90% is to be invested (of course, promising the quality of the product to be invested in), people tend to vouch for option A, as much has been already invested. Why? A fair explanation of this is to not appear wasteful!
The highlighting factor of not appearing wasteful is the avoidance.
- Avoidance of pain, avoidance of regret, and avoidance of disappointment.
In relationships, it has often been seen that people tend to cling to the relationship just to avoid the pain that would affect them post breakup, or regret that they let it go, and the hopelessness that they might not find their significant other.
Or in terms of money, “throw good money after bad money” to backup or demonstrate that initial decision was not a bad one. In other words, to avoid the guilt of getting into a bad deal, people tend to invest more. Escalation of commitment phenomena is seen prominently when people try to appear consistent in what they say and do.
Also to justify one’s previous behavior: ‘why did I invest in it in the first place?’ ‘Why did I get into a relationship with him/her in the first place?’and nobody likes to be proven wrong!
- Self-Affirmation and justification of behavior.
SCE is also seen as a by-product of the effort to justify the viability and rationality of the previous choice made. It sums up into a psychological jargon- Self-Affirmation and justification of behavior. In a layman’s terms it is ‘Log kya kahege?!’….
4) Future Aspects
You might’ve planned a small house with French windows, or where you might want to get hitched or even named the golden babies! Escalation could be because of the future prospects! According to several geniuses, while looking at distant future we are likely to devoid ourselves of the near future! We overlook minute details that play a major role today and have a great impact on our future. The future is affected by how we deal with immediate situations, which are overlooked as logical complications are ignored.
5) Type A personality individuals
Type A personality individuals are likely to display this kind of behavior. The person in your life who is on his/her toes for doing everything, completes assignments extremely before the deadline, over involved in work, yeah, that person is type A personality. These people tend to indulge in SCE because they are the most sensitive to adverse feedback, aka, to be proved wrong!
6) Decision making based on future experience
Such self-conflict may lead to impairing decision making skills. While making a decision, people tend to refer to their past experiences. When people hold a memory of positive outcome from a decision, they are likely to decide in a similar way in a similar situation, while avoiding making similar mistakes from the past. Also, people tend to believe that if they invest a little more time and energy, maybe they may retrieve the losses.
7) External locus of control
Another factor is external locus of control. The characteristics of people with this particular trait are- they tend to blame external things such as luck, chance and fate for their life events. For example, ‘I think it was bad fate I lost my money!’
8) Testosterone and cortisol levels
When it comes to taking risky decisions, on physiological level, individuals with higher level of testosterone are likely to indulge in it while high level of cortisol being in extremely another end.