Sunk costs: revisted

A friend of mine and I got into a discussion the other day about sunk costs and my use of it in my previous post. Basically, she told me that her business-major boyfriend told her that economically speaking, I used the term incorrectly (which I realized at the time -- those darn societal figures of speech never seem to be quite accurate, huh? :-) ). Anyway, it sparked some interesting discussion all around about decision-making theory. The funny thing is, even using the correct definition and the critiques that came up in these discussions makes it seem all the more applicable for me. The idea of sunk cost, it seems, is kind of stupid because regarding an investment as a sunk cost basically implies that previous actions have no bearing on future actions. In smart decision-making, you take into account the history when making your decision about the future. To regard everything that has happened as a "sunk cost" and stick with the endeavor anyway because you've invested "so much" in it is basically akin to throwing good money after bad.

So, as a New Year's Resolution to myself (and all of you reading!), I'm making it a goal and a Priority to stop throwing good money after bad. So to speak.

(P.S. Yes, I did say New Year's Resolution... being the perpetual student that I am, I tend to re-evaluate things based on the academic calendar, rather than -- or really, in addition to -- the new calendar year. Like I said, it's the perpetual student in me :-)).