Each of us has encountered the “suitcase without a handle” situation, when it’s a shame to throw it away and inconvenient to carry. Such situations are often faced by professionals of different levels and stripes in a variety of industries and business segments.
In business, this means that despite all the facts and forecasts, we continue to invest in unprofitable things, without having any information or prerequisites according to which they will become profitable.
The phenomenon according to which we continue to invest in an unprofitable project or work where we shouldn’t (and live too...) is called sunk cost fallacy (recessed costs fallacy). Of course, there is still an innate resistance to change, but more on that in other articles.
Psychologists say that it can be very difficult to recognize reality and stop denying obvious things. Although from the outside and in an ordinary situation it seems, is it really possible to deny the facts when they really are? It turns out that it is possible.
This is why they continue to tolerate violence, and why leaders give their subordinates a chance to improve. Yes, I deliberately mention these things in one sentence, because... This is also violence - against the manager, colleagues, the company as a whole, and most importantly - against oneself.
What is the difficulty? Our psyche and brain are tripled to protect what we have achieved, and thanks to what we have achieved, we form our picture of the world. What does it feel like to give up your worldview or at least revise it a little?
We have worked so hard on the project, how can we stop now when it is about to end? It won’t end, and if it does, then as they say: “the living will envy the dead.”
Or a mental trap for an employee:
Yes, at this job they pay me little, they load me with work and only criticize me. But I’ve done so much for them, don’t they really appreciate me? Apparently the time has come to change jobs, and a significant increase in salary is expected.
At some point, the subconscious tells you - hey, you worked so hard and will you give up so easily? Why then were all these reworkings and extra efforts? Are you ready to just reset everything?
I think each of us imagines what kind of psychological pressure a person is experiencing at this moment, whether he is a general director or an ordinary employee.
It is for this reason that many players suffer losses on brokerage exchanges and markets such as Forex. You made a bet and wait for it to play, despite the fact that the loss is obvious. And the further you go, the greater the loss. In such a situation, either a look from the outside or a margin call can stop it. Players on the exchange are recommended to set a stop loss (loss threshold) in order to automatically close unprofitable transactions. You will be surprised, but many do not use this, hoping that after a drawdown they will make an unrealistic profit.
As soon as the thought “I have done or invested so much...” appears in your head, think about whether you are in a trap sunk cost fallacy. Weigh everything carefully and make the right decision.