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Lecture 16

INST 354 Lecture Notes - Lecture 16: Sunk Costs, Robert Trivers, Parental InvestmentExam

Information Studies
Course Code
INST 354

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INST354 Lecture 16: Sunk Costs 3
Another reason that some apparent sunk cost ventures may not be irrational is that the
decision makers are choosing actions to project and preserve their reputations for being
decisive or for not being wasteful. Just as the person who orders too much food might be
labeled a poor judge of his or her own appetite and wasteful, these decision makers might be
trying to protect their future reputations as morally consistent individuals or good decision
makers. If, indeed, abandonment of a sunk cost negatively affects future reputation, then it may
be wise not to do it. The auto maker who abandons the Edsel may be derided for making a
“gutless” decision and lose future clout and actual power within his or her organization. The
skier who gives up after having already paid $90 may be regarded not just as financially
wasteful, but as confused or silly, and lose his or her friends’ respect. Such future reputational
costs are perfectly reasonable factors to consider in determining whether or not to abandon a
particular course of action (see Figure 2.5). But the sunk cost per se should not be a factor. So
long as other people believe in honoring sunk costs, the person who does not may be regarded
as aberrant.
Some of these subtleties of interpretation were revealed in efforts to explain parental
investment behaviors in human and nonhuman species. In a landmark, and still controversial,
article on this topic, the anthropologist Robert Trivers (1972) defined parental investment as
“any investment by the parent in an individual offspring that increases the offspring’s chance of
surviving (and hence reproductive success) at the cost of the parent’s ability to invest in other
offspring” (p. 139). Trivers used the concept of parental investment (e.g., differential feeding of
young, defense of a nest) to explain diverse phenomena such as differential mortality rates
between males and females, promiscuity, competition for mates, and nurturing strategies.
Trivers’s original explanation for the tendency of males to be more likely to abandon their
offspring and mates than females exhibits a true sunk costs fallacy:
At any point in time the individual whose cumulative investment is exceeded by his partner’s is
theoretically tempted to desert, especially if the disparity is large. This temptation occurs
because the deserter loses less than his partner if no offspring are raised and the partner would
therefore be more strongly tempted to stay with the young. (p. 146)
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