Navigating Sunk Costs And Overcoming the Sunk Cost Fallacy

Money and houses balanced on what seems like a wooden scale - sunk costs

Sunk costs represent investments irretrievably spent and unrecoverable. These investments can be financial, time-based, or emotional. In contrast, other types of costs can be modified or avoided based on future actions. For example, variable costs fluctuate with the level of production or output, while opportunity costs indicate the potential benefits sacrificed when selecting one option over another. … Read more

What is Opportunity Cost? How to Use It, Formula and Calculation

A man looking at multiple doors - a reference to opportunity cost.

Opportunity cost is an essential economic concept representing the potential benefits or value forgone when choosing one alternative over another. It is the cost of the next best alternative that people give up to pursue a specific action or decision. Why Is Opportunity Cost Important Opportunity cost is crucial in decision-making because it helps individuals … Read more