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How Understanding Sunk Costs Saved Me Valuable Time and Energy


I was on my way home from campus the other day, at the campus train station waiting for my train to arrive. I always take whichever train comes first, and I am indifferent between paying a price of Rp 8000 for the comfy air-conditioned Comutter Line or just Rp 1500 for the more proletarian economy class. As the ticket guy had told me that the next train to come would be the Comutter Line, I bought the ticket and went on to wait on the platform for the train to arrive. 

Every comutter reading this knows that information in our electric railway system is hardly ever reliable. The information guy on the speakerphone says that the next train to arrive would be the economy class. There is no information as to when the Comutter Line train I was supposed to take would arrive. By this time, I had already went up and stood on the far end of the platform, far away from the ticket counter. 

I had now two options: (1) make a really quick run back and ask or a ticket switch and a refund (2) not take the train and wait for the next Comutter Line train to show up or (3) take the train anyway (you can get by with using Comutter Line ticket on the economy class, but not the other way around, obviously). Some people would take either of the first two options as the third option would mean realizing a net loss of the price difference between the two tickets, Rp 6500. 

After a quick thought, I decided to take the third option, take the economy train anyway. Here is why: the Rp 8000 I had paid earlier was a sunk cost, it could not be recovered. The decision I had to make was essentially whether running back and forth or waiting another God knows how long for the next trainwas worth the Rp 6500 difference. In my case, it was not, and I realized the net loss anyway. 

To more easily apprehend this, let’s think for awhile what you would do in this hipothetical situation. What if you were a given free ticket and then you stood to wait for the train. Once the economy train was approaching, you were told that you have the option to get Rp 6500 if you would either run back 50 m away to redeem it or wait an unknown minutes for the next train. If the answer is no, you take the train. There is no essential difference between my taking the train and yours. It just would not have been worth it for me to waste energy to run back and forth, or to jeopardize my chance of returning home early for a mere Rp 6500. Other people may have different preferences, but keep in mind the fact that you have already paid for the ticket in the first place should not alter your decision.

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