Lessons in Sunk Costs

I’ve been meaning to post about this, but it got lost in the shuffle of everything else. A friend of mine quit his job a couple of weeks ago to move on to another position. The guy changes jobs about once a year and I’ve always admired his willingness to just get up and move on to something else. It’s not like he doesn’t care. He is just able to move on the idea of sunk costs better than anyone else I know. Below is an excerpt from his blog:

Lastly, a real quick story to wrap things up. A couple of weeks ago, I had breakfast with Annie Duke (professional poker player) who told me a great life lesson and story around sunk costs. In the most basic terms, the concept is used in making good decisions (which is the secret to the success of professional poker players). Wikipedia defines sunk costs as “costs that cannot be recovered once they have been incurred.”

So, for example, if you’re waiting in line at the grocery store, and the line next to you moves faster, most people won’t hop over to the faster line because of the time they “invested” in their current line. This makes absolutely no sense as anything invested in your past shouldn’t influence your future. Another example revolves around relationships. Most people stay together because they’ve “been together for the past five years.” Again, people shouldn’t make decisions based on past investments. And if you’re wondering how this applies back to poker. Once you make a bet and put your chips in the middle, that money is no longer yours (so you shouldn’t make bad decisions on getting it back).

Instead, you should look toward the future and look at all the different paths, opportunities, and possibilities presented to you right now. The sky is the limit. Everything in your past gets you to this point but it’s up to you to make the best possible decision on which path you want to go down.

It’s a truly inspiring thought that helps you keep your eyes down the road without devaluing the experiences that have gotten you to where you are now.