The Sunk Cost Fallacy

Or "Know when to quit".

What is it ?

A formal definition from Oxford Language states

the phenomenon whereby a person is reluctant to abandon a strategy or course of action because they have invested heavily in it, even when it is clear that abandonment would be more beneficial.

Simply put, the more resources you invest in something, the less likely you are to quit on it. Even if the alternative would be much more beneficial.

A simple example

You buy an asset for $100, its value drops to $50. You hold onto it in the hope of recovering your losses, even though, selling it for $50 and acquiring some other asset with upside would likely bring you back up faster.

It is rather similar to loss aversion, and how the impact of a loss feels stronger than a gain.

Because you don't want to loose what you have spent, you hold onto the situation.

Getting out is not easy

That's something I have been thinking for quite some time now, and I am quite bad at it. Quitting is not always easy. Especially if you can't see a better alternative.

But sometimes, getting out, even for no alternative is better. Staying in has a cost, not only on what you spend on the opportunity.

Being in such a loosing position can have a big impact on your mental health, your positivity and outlook on things.

Be aware of that, and try your best to understand when and how to move on from what's not working. Whatever it is.

How does that relate to software, automations, tools, ...

You can invest a lot into building tools, software, ... whatever can help you achieve your goals. You may make bets along the way. Some things will work, some won't. Someday, something new or much better may come up, ...

There will be a time when some better alternative is around. You should at least consider switching. You need to evaluate alternatives to what you do. Then, make educated decisions. To stop and change or not ?

Though, remember, changing will also come with its set of challenges and costs.

The grass isn't always greener... but, are you still having grass where you are ?