I don’t disagree with what you’re saying about theoretically rational agents. I think the content of my post was [there are a bunch of circumstances in which humans are systematically irrational, sunk cost fallacy is on net a useful corrective heuristic in those circumstances. Attempting to make rational decisions via explicit legible calculations will in practice underperform just following the heuristic.]
To spell out a bit more, imagine my mood swings cause a large random error term to be added to all explicit calculations. Then if the decision process is to drop a project altogether at any point where my calculations say the project is doomed, then I will drop a lot of projects that are not actually doomed.
I agree with you on this, but I also don’t think “sunk cost fallacy” isn’t the right word to describe what you’re saying. The rational behavior here is to factor in the existence of a random error term resulting from mood swings into these calculations, and if you can’t fully factor it in, then generally err on the side of keeping projects going. I understand “sunk cost fallacy” to mean “factoring in the amount of effort already spent into these decisions,” which does seem like a pure fallacy to me.
It’s reasonable e.g. when about to watch a movie to say “I’m in a bad mood, I don’t know how bad a mood I’m in, so even though I think the movie’s not worth watching, I’ll watch it anyway because I don’t trust my assessment and I decided to watch it when in a calmer state of mind.” Sunk cost fallacy is where you treat it differently if you bought yourself the tickets versus if they were given to you as a gift, which does seem, even in your apology for “sunk cost fallacy,” to remain a fallacy.
I don’t disagree with what you’re saying about theoretically rational agents. I think the content of my post was [there are a bunch of circumstances in which humans are systematically irrational, sunk cost fallacy is on net a useful corrective heuristic in those circumstances. Attempting to make rational decisions via explicit legible calculations will in practice underperform just following the heuristic.]
To spell out a bit more, imagine my mood swings cause a large random error term to be added to all explicit calculations. Then if the decision process is to drop a project altogether at any point where my calculations say the project is doomed, then I will drop a lot of projects that are not actually doomed.
I agree with you on this, but I also don’t think “sunk cost fallacy” isn’t the right word to describe what you’re saying. The rational behavior here is to factor in the existence of a random error term resulting from mood swings into these calculations, and if you can’t fully factor it in, then generally err on the side of keeping projects going. I understand “sunk cost fallacy” to mean “factoring in the amount of effort already spent into these decisions,” which does seem like a pure fallacy to me.
It’s reasonable e.g. when about to watch a movie to say “I’m in a bad mood, I don’t know how bad a mood I’m in, so even though I think the movie’s not worth watching, I’ll watch it anyway because I don’t trust my assessment and I decided to watch it when in a calmer state of mind.” Sunk cost fallacy is where you treat it differently if you bought yourself the tickets versus if they were given to you as a gift, which does seem, even in your apology for “sunk cost fallacy,” to remain a fallacy.