Have you ever walked into a movie theater, excited to be entertained for the next two hours, only to realize the film is a flop? When this happens, what do you do? If you knew you could not get your money back, would you get up and walk out, or would you suffer through the show? Researchers have actually studied this scenario and observed that the majority of people will sit through a bad movie instead of leaving.
Sitting through a bad movie you don’t want to see is an example of the sunk-cost fallacy. Hal Arkes and Catherine Blumer wrote a research paper titled, "The Psychology of Sunk Cost." The idea of the sunk cost is that people have a tendency to continue along a path of action once they have invested time, money or effort in that path. In the movie example, I may think to myself, “I had to pay 10 dollars to get in, and I don’t want to lose that 10 dollars!”
However, this is not the most efficient way to consider the situation. Assuming the theater doesn’t refund your money, regardless of whether you stay or leave the theater, you are out the $10. So as you sit in the theater at the 30-minute mark, the choice now becomes: Do I stay to “get my money’s worth,” or do I cut my losses and recover the next 90 minutes of my life to be used in a better way? In this scenario, the most effective choice is to leave. No matter what you do, you are out the price of admission. By staying, you pay the additional price of time. By leaving, you at least get your time back. However, we tend to let our past investment in an endeavor incorrectly bias our future choices.
This brings me to the title of this article. At first glance, it may appear that I got things a little mixed up. But this thought is an extension of the sunk-cost fallacy. “I wouldn’t have seen it if I hadn’t believed it” is a quote from the renowned philosopher Marshall McLuhan. The quote describes a common human tendency to see what we think we should see. Because we expect something to be a certain way, we will watch for any evidence to support our own line of thinking. In doing so, it is likely (perhaps almost certain) that we will miss observations that may run counter to our expectations. This is related to the sunk-cost idea. When I have invested in something, I will watch for every possible observation that will support my decision. I will likely be blinded to observations that do not support my investment.
In my past few columns, I shared an example of how agricultural research can determine whether a producer should spend money on a product advertised to improve crop growth. The example I shared highlights how the sunk-cost fallacy could lead me to see what I wanted to see if I were doing a split-field research trial. Producers sometimes spend money on products or practices that are not profitable because they feel too invested to quit.
Many years ago, a potato grower approached me about evaluating a fungicide. The grower had been using a well-researched fungicide for managing white mold in potato but wanted to change to an option that was less expensive and considered to be more environmentally friendly. I conducted a research trial, and all the observations indicated the newer, environmentally friendly option was not as effective as the traditional fungicide. In fact, the newer option did not have a measurable benefit.
At a field day, I enthusiastically shared the results of the trial, certain I was doing the grower a favor. However, the grower did not receive the report with the same level of enthusiasm as I had. She related that the newer product was working great and did not understand why I wasn’t seeing the same thing.
Her response prompted additional research, correspondence with colleagues and a reevaluation of my competence as a researcher. After conducting a second research trial, I observed the same results as before. I contacted the grower to see what the differences may have been between my field trials and her experience. This time the story was different. She now told me that my field-trial data reflected what she was seeing on her farm. When asked why she had been so sure of the new product's efficacy during the first year, she said, “I really hoped it would work. I really wanted to switch to this product.” She only “saw” positive results because she believed she would see those results. She sunk money and effort into the new product, and she wanted that investment to pay off.
Removing bias is imperative for clearly evaluating our inputs and efforts. We may get caught up in wanting to believe the advertised value, or we want something to work because that is what we want to happen. Just knowing we are prone to sunk-cost psychology can help us avoid seeing something just because we want to believe it.
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