Michael Shermer in Scientific American:
The war in Iraq is now four years old. It has cost more than 3,000 American lives and has run up a tab of $200 million a day, or $73 billion a year, since it began. That’s a substantial investment. No wonder most members of Congress from both parties, along with President George W. Bush, believe that we have to “stay the course” and not just “cut and run.” As Bush explained in a speech delivered on July 4, 2006, at Fort Bragg, N.C.: “I’m not going to allow the sacrifice of 2,527 troops who have died in Iraq to be in vain by pulling out before the job is done.”
We all make similarly irrational arguments about decisions in our lives: we hang on to losing stocks, unprofitable investments, failing businesses and unsuccessful relationships. If we were rational, we would just compute the odds of succeeding from this point forward and then decide if the investment warrants the potential payoff. But we are not rational–not in love or war or business–and this particular irrationality is what economists call the “sunk-cost fallacy.” The psychology underneath this and other cognitive fallacies is brilliantly illuminated by psychologist Carol Tavris and University of California, Santa Cruz, psychology professor Elliot Aronson in their book Mistakes Were Made (But Not by Me) (Harcourt, 2007). Tavris and Aronson focus on so-called self-justification, which “allows people to convince themselves that what they did was the best thing they could have done.”
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