*This transcript is produced using transcription software and reviewed for quality. Despite our best efforts, some passages may be incomplete or contain errors due to audio quality or software limitations.*
Matthew:
Hello, and welcome to this episode of Superhero Ethics. I’m happy to say this is Matthew Fox, and I’m here with our regular co-host — well, there’s nothing regular about him, but still a co-host on a recurring basis — Paul Christopher Hoppe. Paul, how are we doing today?
Paul:
Doing pretty good, yeah. It sounded like there was a spaceship outside my window about three minutes before we started recording. Fortunately they seem to have returned to their home planet, although you said that might actually be Minnesota.
Matthew:
Yeah, we’re talking about some pretty heavy-duty lawnmowing that’s been happening. It stopped at Paul’s and then immediately started outside my house, which is interesting because, to be clear, we live more than a thousand miles apart from each other. Happily, mine is far enough away that it’s not coming through the mic, so I can fix it in post — but we’ll see.
Paul:
Fix it in post.
Matthew:
Fix it in post. Let’s jump right into our topic. As we mentioned, Paul’s a professional poker player, and I’m learning to be one, or at least a highly skilled amateur. So we’re going to be using poker a lot, but still talking about superheroes, and talking about the way a lot of these concepts and philosophical ideas can affect how we look at the stories we love, and how we look at our own lives. Paul, I’m going to give you three examples, and I want you to tell me if there’s some unifying factor between them. When Thanos says he cites the cost, how much he’s paid and how much he’s lost, as a reason why he can’t stop — why he has to fulfill his plan of the snap. When I talk to you, at length, in high school, college, and after college, for most of my twenties and thirties, about how, okay yes, the relationship I’m in is incredibly toxic, but I’ve spent so much time in it — and if I end it now instead of ending it six months ago when everyone told me I should have, well, I’ve spent so much time in it, I can’t just end it now. It would have all been for nothing. And the last one — and this is, of course, purely hypothetical, no connection to our own world — a president starts a war that everyone tells him he shouldn’t start. He’s convinced they can win, even though everyone tells them they probably can’t. Months and months later, when he’d said the war would be over in, hypothetically, a couple of weeks, and everyone is now telling him the war can’t be won, he has to keep fighting because he doesn’t want to admit all that’s been wasted — all the costs that have been for nothing. So he starts using those costs to say, “Look how much we’ve spent, look at all the lives that have been lost — we have to win.” What do those three situations have in common?
Paul:
Yeah, I mean, the last one — it sounded like a shorter time frame, but it’s basically Vietnam.
Matthew:
It’s funny, I did write it with some thought toward current events, but as I was writing it I thought, “Oh, this is Vietnam. This is—”
Paul:
This is all of the history of the world, because humans have some cognitive issues, you know.
Matthew:
Honestly, it might even be a war long, long ago in myth, where someone says, “We’ve got to break all the rules of war because we spent ten years on this beach” — and we’ll be reviewing that movie pretty soon. But anyway.
Paul:
Yeah, it’s a pyrrhic victory. So they’re all examples of the sunk cost fallacy, wherein one uses one’s previous investments to justify decisions made in the present, rather than adjusting to current reality — looking at things through a fresh lens and trying to make the best decision from that point forward. In poker we have a simple saying to remind people not to fall victim to the sunk cost fallacy: don’t throw good money after bad. Basically, maybe you made a bad investment before, but making another bad investment isn’t going to justify that previous investment. Maybe it was even a good investment and it just didn’t go well — either way, you have to adjust, you have to update to your new circumstances. And people don’t.
Matthew:
I get what you mean, that you heard that from poker, but I don’t think the sunk cost fallacy comes from poker — it primarily comes from economics. That’s certainly where I first heard it, in microeconomics courses.
Paul:
Right, “don’t throw good money after bad,” specifically —
Matthew:
— in terms of investments. Like a precept for business-school type things: you spent this much money on an investment, and at some point you cut your losses. You say, “New Coke is just not going to work out, we’re not going to keep spending money on it.”
Paul:
I’d like to challenge one thing — I don’t think it definitely came from economics first. I think there are a lot of things in economics that came from poker, and I’m sure vice versa. I have a friend who was doing some kind of economics program in college, and their teacher would have them go play poker to demonstrate certain concepts. So there’s a very clear parallel there.
Matthew:
Oh, for sure. And I think that’s part of why we use it on this podcast so much — it’s such a microcosm of decision-making, risk, and prior cost versus current cost. I did a little research on this, so let me give us some fun background. The term “sunk cost fallacy” was coined in 1980 by behavioral economist Richard Thaler. It may well be that he’d heard it from other people — maybe at a poker table, maybe at a craps table — but he certainly published it first. Giving a little more of the technical definition, at least in the world of psychology — which a lot of us have studied — there’s a really interesting paper I read as part of this, “Loss Aversion as a Potential Factor in the Sunk Cost Fallacy,” in the International Journal of Psychological Research. The authors write that the sunk cost fallacy relates to a greater tendency to continue an endeavor once an investment of time, effort, or money has been made. Doing so is considered an error, because a rational decision-maker should only consider current marginal costs and benefits, and should neglect sunk costs, since they’re irretrievable no matter what option is chosen. This phenomenon can occur in humans and non-human animals — I’m not sure how they tested that in animals, I didn’t get a chance to dig further into it, but it’s an interesting idea: maybe this is a deep biological thing.
Paul:
I don’t want to dig too deep into animal testing, but hypothetically — a bunch of beavers building a dam, and it’s not going well, and it kind of demonstrates that maybe that’s not a good place to build the dam, and they should go somewhere else. I don’t really know much about dam-building or beavers, but often there’s a tendency to think, “This is where we started doing the thing, so we’re just going to keep doing it here, because obviously this is where we’ve made our progress.” When in fact, sometimes the lack of progress should teach us we need to make an adjustment, we need to move somewhere else. I could see how non-human animals might do that in observable ways that don’t require lab conditions. But yeah, hopefully not — for their sake.
Matthew:
Let’s talk about why it happens, because it’s interesting to me that a lot of the study of it comes out of psychology. At first I thought, “wait, really?” But then it makes a lot of sense, because it is a psychological factor.
Paul:
Completely. You mentioned loss aversion — or the paper mentioned it. To give a poker example: someone’s playing poker all night, into the wee hours of the morning, and they know they should go home, but they’re losing, and they don’t want to book the loss. They want to get even, make it back. And if they make it back and cash out a three-dollar win, they think, “I won.” It’s like — you spent 20 hours to win three dollars, and when you were losing, however much it was, it’s like there’s this feeling that losing $200 or $2,000, what’s the difference? But the difference between winning three and losing three feels like a categorical, binary difference. It’s one of the things I enjoy about poker and talking about poker — it takes things that apply in so many circumstances and lays them bare in an obvious, in-your-face way. Whereas you mentioned relationships earlier, and it doesn’t have to be romantic relationships — it can be friendships, it can be a job.
Matthew:
Exactly — “I’ve worked here so long, and I’ll get promoted eventually, and if I go to another job I’ll be further away from that.” Sometimes there’s some validity there, but the validity wouldn’t be “I’ve put in this work, so it would necessarily be a waste.” It would be, “I’ve put in this work and made real progress toward a goal I still want and am likely to achieve.” The fallacy would be, “I’ve put in that work, therefore I shouldn’t evaluate another opportunity.” If you’re three years into a career track and two years from a promotion to something you want —
Paul:
— you should still check whether there’s another place where you’d only be one year away, because they have a faster track or whatever. I know as little about these types of things as I do about beavers building dams.
Matthew:
No, but I think you captured it perfectly — both how poker is a great illustration of how this works in theory, and also a good illustration of why it’s a lot harder to deal with outside of something like poker. Because in poker, you actually know the odds. If I’ve spent money on the first couple of steps of a poker hand, and now I face a new bet, and the fifth card that comes tells me I don’t have a chance of winning this hand, all the money I already put in the pot doesn’t change that. I can categorically know that — I’ve put 50 in the pot, but now I’m being asked to put in 200 when I don’t have anything like the chance I’d need to win this pot. There’s still some guesswork, but you can pretty accurately work out the odds and whether they stack up. All of my friends can look at me and say, “Matthew, you have all these toxic traits, your partner has all these toxic traits, you’re not going to fix this” — and they’re probably right, a lot of the time. But not always. You see this in sports all the time too — there’s a sunk cost fallacy for the players, the coaches, the managers, and also for the fans. You look at a team that’s going nowhere in the middle of the season, and you start asking, “Should we sell off?” versus, “We’ve paid these players so much, we’ve got to keep giving them a chance.” There are times when the players suddenly remember they’re really good two-thirds of the way through the season and start winning like crazy, and you don’t expect it. My point is only that one of the things that makes the sunk cost fallacy so interesting is that the line between what is sunk cost and what isn’t is a lot clearer at a poker table, or in other numerically definable situations, than it is in a lot of other parts of life — which doesn’t mean it’s not relevant, it just means it’s a much harder conversation.
Paul:
I agree with most of the gist of what you’re saying. In poker it’s not necessarily easy to know what your next action should be — that’s hard in the first place, and then when you have emotional attachment to the investments you’ve already made, that makes it harder. It clouds your judgment. What you really need to do is look at it dispassionately: is this next investment a good one, regardless of whether the prior investments were good ones? Given where I am right now, based on whatever’s happened, is this a good idea to invest further? You can’t calculate it perfectly, because poker is a game of imperfect information — you don’t know the other person’s cards. But you can use math, you can enumerate things, you can say, “these are my assumptions, and given my assumptions, here are the cold hard facts about whether this would be a good investment.” If you make good assumptions, you should be able to come to good conclusions. In everything else, it’s much harder to evaluate the value. If this is your dream person, and there are certain issues in how you get along, your payoff if things work out is enormous — it could be extreme happiness, fulfillment, exactly what you’ve wanted all your life. Evaluating that payoff isn’t like knowing there’s $150 in the pot. In most things in life, you have to put your own value on it. But even then, once you’ve figured out what the value is — even if it isn’t strictly enumerable — you still have to figure out the odds of it happening. And if you have all this prior investment, it makes it so much harder to dispassionately evaluate that. To figure out — sorry, you froze on me.
Matthew:
I hear you. So let’s start talking about the psychology behind why this happens, and where loss aversion comes from. I think a part of it, which is psychologically tinged but also isn’t always accurate, is the way our brains work and often misunderstand variance. This is obviously a topic we’ll come back to a lot. There’s a phrase often used in gambling that also applies to so many other things: dice have no memory. Say the chance of rolling a seven with two dice is higher than any other single number, but still less than 50%. In games like craps, a lot of people think that every time you roll and don’t get a seven, the chances of a seven coming up next go higher and higher.
Paul:
It’s due, Matthew. It’s due.
Matthew:
Right, it’s due. If a seven comes up, say, one time in three, and you’ve rolled four times without it, it feels much more likely now — and in a small sample size, that makes no sense. If you’ve rolled it 20 times without a seven, maybe the dice are loaded and you should check that. Or maybe it takes 200 times before that’s a meaningfully large number.
Paul:
It’s a large number, but yeah.
Matthew:
Assuming a fair system, I think that’s numerically provable in the same way each die roll isn’t connected to the last. If you miss a flush draw two times in a row, that doesn’t make it more or less likely to hit next time. In the same way, people start thinking those kinds of thoughts about themselves: “The last two people cheated on me, so this one probably will too, I have to be hyper-aware of every warning sign,” or the flip side, “My last two bosses were terrible to me, so of course this one won’t be — I’m not going to look at the danger signs.” I think there are two parts here. One is just a misunderstanding of trends — in the same way that missing your last two flushes isn’t connected to missing this one. But if you miss five flushes in a row, maybe you’re misreading two spades as a spade and a club — you might be misevaluating the actual situation. Same thing with, “Why do I keep dating toxic people? Why is my luck so bad?”
Paul:
Maybe you’re drawn to toxic people. Maybe you’re making really bad wagers.
Matthew:
But the point is, there’s a lot of psychological reasons we want to believe in this, and we’ll get into that. But most of the time we’re able to trick ourselves into thinking — or I won’t say “we,” since you might be immune to it, but those of us who fall for it — it’s hard to ever say, “I know this is a sunk cost.” You convince yourself it’s not sunk cost, that the cost you paid is somehow still relevant.
Paul:
Right, like it’s a “live” investment, when it’s really just history at that point. I think a big part of it is having that emotional investment — the emotional connection to the work you’ve put in, the money you’ve put in, the emotions you’ve gone through — and wanting, whenever it ends, to not have the regret of feeling like it wasn’t worth it. To reach that payoff where it feels like, “Well, I didn’t do well, but at least I won this much back,” or “That relationship wasn’t perfect, but at least I ended it on my terms after some good times.” I think the regret of “booking the loss,” essentially, is a difficult thing for people to come to terms with. I wouldn’t say I’m immune to it, but I’d say I’m less susceptible than the average person, because I’ve been working on it my whole life. Playing poker forces you to confront that on a daily basis — hand to hand. In this hand, I’ve put in some money, that money’s not mine anymore, it’s in the middle. That’s history. Now I have to make this decision on its own. I’ve heard people say things like, “Well, if you called the turn, you have to call the river,” and I’m like, what are you talking about? There are spots against individual opponents in certain runouts where, sure, that ends up being true — but that’s because you make that decision on its own merits, not because of what came before. If you think four consecutive non-sevens in a row are particularly unlucky, and you think the odds are one in three when they’re actually one in six — that’s just a good example of people not intuitively knowing odds. It takes math, it takes actually thinking about it. I don’t know the odds off the top of my head, but I worked them out just now: there are six ways to make a seven, and thirty-six ways to combine two dice, so six over thirty-six is one in six — tell me if that’s wrong. But the point is, that whole “I’m due” feeling, or the emotional attachment — there are so many ways to go wrong. You’ve named a bunch of different biases that are all connected here, and they all add up to it being difficult to put the past in the past, look at where you are right now, and pick the path forward.
Matthew:
No, I think that’s really true. Earlier you mentioned — kindly — a hypothetical poker player who gets excited because they stayed an extra two hours to win an extra dollar fifty. That’s very much me. I’ve told you those stories: “I won! I came out winning ten cents an hour.” This is skipping ahead a bit, but I think it’s a good way to explain the feeling: poker is a good example because, as we talked about in the previous episode, gambling is almost more of an entertainment thing, whereas playing poker specifically, your goal is to win money — for profit, or for the mental satisfaction of winning. Gambling is more about the thrill, the accomplishment. When I’m feeling that way, it’s very much a gambler’s mindset, because it feels amazing to go home knowing I was down $200 and came back to win $200 and end up three dollars ahead — that doesn’t feel as good as it should, relative to actually winning $200 outright. But the thing I’m able to do is ask myself, “Why am I evaluating it that way?” If I actually want to make money at poker, instead of just chasing the gambler’s high, I need to stop thinking like that. The other thing that helped me is that you don’t often look at all the costs. I’d tell myself, “It’s 11 o’clock at night, I could leave the casino and go back to my hotel room” — or go home — “or I could stay three more hours to win three dollars.” In terms of the money on the table, I’ve won that back. But I don’t count as a cost how much of a zombie I feel like the next day because I got three hours less sleep, going home at two in the morning instead of eleven like a smart person. I think that’s another good way to get deeper into this idea of loss aversion, because I do think a big part of it — not all of it, but a big part — is the fear of judgment from others. The fear of the “I told you so’s.” With poker, I think a lot of players, especially when you’re doing it for fun, or talking to people who don’t play as often — they’ll ask, “Oh, you went and played poker last night, how’d you do?” And in my head, I know that on some level they’re evaluating whether I’m a degenerate gambler.
Paul:
Or whether they think poker is that, or whether you might be.
Matthew:
Or I might be, or I might be fooling myself.
Paul:
No, I mean — you said “in my head, I know they’re thinking this.”
Matthew:
Oh, yeah, yeah, no — they might be, exactly. And the psychology of “everyone’s against me, I’m paranoid.” I’ve commented before that depression is incredibly egotistical — you assume everyone’s always thinking about you all the time. The same thing applies when I try to give advice to people in bad relationships. I was talking to someone a couple of weeks ago about them finally deciding to end a marriage that a lot of people in their life had recognized as toxic for some time. I say that without judgment — we’re all outsiders — but they said one of the reasons it’s hard is that they know their mother is going to say something like, “I told you not to marry that bum.” That fear of judgment, that fear of “I told everyone I could make this work, and what happens now if I can’t?” Pulling it back to the title of our podcast — I think that’s exactly why Tony can’t let go of Ultron. Everyone judges him, everyone says, “Tony, you’re out of control, you’re doing all these crazy things.” He basically says as much to Banner. He doesn’t want to be judged. He starts to realize there might be a problem with Ultron, and instead of going to the Avengers and saying, “Guys, I screwed up, I need your help fixing this,” he says, “No, I don’t want to tell them until I can tell them it worked out” — because he doesn’t want Cap to win. He’s locked in this battle with Cap over who’s right. On some level, Tony is still trying to get his father to say Tony is better — there are so many factors, but the fear of outside judgment is part of it.
Paul:
Yeah. And I think there’s the fear of outside judgment, and sometimes there’s the reality of having to listen to somebody talk about it. I have a poker story — this guy I used to play with had a tendency, if he won a big hand, to narrate it to people for three days straight, over and over. This other guy gets into a pot with him early on in a hand, the guy raises, and he’s like, “You know what, I’m just going to fold, because I don’t want to have to listen to you talk about winning this hand for three days if it turns into a big pot.” Just — “I don’t want to hear you tell this story tomorrow.” And with the marriage situation you’re talking about — it’s probably not just fear of the mom saying “I told you so,” it could be the reality that they’re going to hear about this, and not wanting to have to say, “yeah, you were right.” And here’s the thing that actually frustrates me about this — maybe they weren’t right. Just because something doesn’t work out doesn’t mean it was the wrong decision at the time. People saying “I told you so” doesn’t mean they actually knew. It’s like watching a baseball game and saying, “I knew this team was going to win” — you didn’t know anything. The outcome wasn’t predetermined, that’s not how things work. I mean, maybe you can have a worldview where it is, but the idea that you actually had knowledge of the future — enjoy your sports betting, then, I guess you’re about to get super rich. So I think there’s a combination of the fear of being judged — that maybe people are thinking these things — which is why I rarely talk about poker results with people. If somebody asks, “How was last night?” I’ll say, “It was great,” whether I won a thousand or lost a thousand, because it was a good game, I enjoyed myself, I felt like I played well. That’s what made it a good night. Sometimes there are stories worth telling. But breaking any given thing down to just the numerical outcome — like that person’s marriage — there could be toxic aspects, but that doesn’t mean there weren’t positive things along the way too. It sounds like, not knowing anything about the exact situation, this person eventually weighed whatever positives there were against whatever negatives, and decided, “Okay, reevaluating the situation right now, this is what’s best for me, this is the way to proceed.” Sometimes it’s not just the judgment of others, but our own perceptions of our previous actions — making a decision now can feel like admitting, “I made a bad decision before,” and there’s an unwillingness to accept that. Whereas a lot of decisions we make now are based on having more information than we had before — which means the earlier decision wasn’t necessarily bad, given the information available at the time. It can be either: sometimes it really was a bad decision, and that’s okay, now you have to make a better one and move forward.
Matthew:
At some point we’re going to talk about results-oriented thinking, and how problematic that can be in poker, superheroes, and life — I think this is an offshoot of it, where the consideration isn’t just whether you value your actions based on the results, but how other people will judge that, and what larger story it tells you about yourself. Speaking for myself, as someone who’s gone through depression and other mental health challenges — when the narrative in your head is that negative, it becomes very difficult to try anything, because there’s that voice. It could be an outside person treating you terribly, emotional abuse, or it could be internal, and often the two feed each other — the external creates the internal, or vice versa, which is its own different set of psychological challenges. I don’t want to make light of that, because it certainly happens. But my point is, you stop trying to do things because you don’t want to risk anything. I think that’s one of the reasons I find the sunk cost fallacy so fascinating — it’s not as simple as “just avoid sunk cost,” because the line you’re walking is a narrow one, between avoiding the sunk cost trap and still being willing to say, “It didn’t work yet, but I still believe in this idea, so I’m not going to give up because one month of bad results” — or one lost fight against a villain — “didn’t work. I want to keep trying, I want to keep seeing what I can do.”
Paul:
Or Ultron, but maybe I’ll make Vision, who’ll be pretty cool.
Matthew:
In some ways that’s one of the weirdest ones — I think it’s one of the things a lot of people take issue with in that movie, but it’s not a perfect narrative fit, even though it’s true.
Paul:
There is something different about Vision versus Ultron — I remember seeing that movie and thinking it was fine. I think I liked it more than most people did at the time. I remember you talking about how he tries it once, it doesn’t work, he does this, tries again, and then it works — and that felt kind of frustrating narratively. But I do think you make a really interesting point about Tony not wanting judgment from Cap and everyone else, wanting to just do the thing and have it work out so they’ll see he was right. And making Vision is maybe kind of a sunk cost fallacy too — but also maybe he just believes in his vision, and he’s going to try again until he gets it right. That’s what inventors do. It’s not, “the lightbulb didn’t work, we’ll give up” — it’s, “I’ll get a thousand people to try ten thousand different things, and then I’ll claim credit for it.” That’s how you do it.
Matthew:
Yeah, and I think what you’re referencing there is also Edison’s great line — someone says, “You haven’t discovered anything,” and he says, “Yes I did — I discovered a thousand different things that don’t work as filaments.” There were some shady things going on around that story too, but same point.
Paul:
Yeah — I have no idea what I was going to say, so why don’t you say what you were going to say. Sounds good.
Matthew:
Well, another thing that ties in — connected to what we were just saying about internal judgment — is the actual cost, the actual price being paid. One thing the paper talks about is that, oddly, the higher the cost, the more likely you are to fall into the sunk cost fallacy. I think part of it’s because there’s that feeling of “I can’t go back.” In poker, at least, you can always fold and go to the next hand. Yeah — if you’re 25, it’s easy to think, “I can just break up with this person and start again.” At 50, that’s a lot harder. Still possible — I found a great relationship in my early 40s — but it’s harder. One of the lines I keep coming back to is Thanos, when he talks about all he’s lost, all he’s given up — particularly after he’s had to sacrifice his own daughter, Gamora.
Paul:
Chosen to. He chose to.
Matthew:
Chosen to, yes. He was faced with a situation where, to meet his goal, this was the necessary path, and he chose to pay that price rather than deciding the goal wasn’t worth it. But the fact that he frames it as “I had to” is telling — very common. I think what he’s dealing with is that he can’t justify the loss to himself. And the guilt he feels — I get this. There are times where I’ve spent a lot of time trying to build up podcasts, I’ll be honest. That’s time I could have spent doing other things. I’ve been pretty frank about spending a lot of time evaluating what I want to do with podcasting and how to make it work. I had to check myself, because one of the thoughts in my head was, “How many times have you had to say no to people because you needed to go record something?” “Because you needed to spend time editing when you could have been out to dinner or something.” Are you going to feel guilty about all that if you decide podcasts aren’t working out? I was able to work through that and realize part of it is just that the podcast landscape has changed, and I’m changing with it — but also that I’m still getting a lot of positive value from it, even if it’s not quite the follower numbers or the money I would have wanted. But that thought is there. I think it’s there for Thanos, I think it’s there in a lot of Star Trek, but also in MCU stuff — like in the Dark Knight, where the hero tries to talk the villain down off the ledge, away from pushing the button. And sometimes it works, but a lot of times when it doesn’t, the villain says some version of, “I’ve paid too much, I’ve sacrificed too much, I have to make it worthwhile.” I think that thought — you can’t get back that sunk cost, they feel guilty for having paid it, and they’re hoping that if they keep pushing through and win, it’ll assuage the guilt, make up for all the loss that’s happened.
Paul:
I think Catra in She-Ra is a good example of this too. I think she says something along the lines of, “I’ve already done these things, so I can’t—”
Matthew:
I think Zuko does too — doesn’t he say something like that to Iroh at some point?
Paul:
Yeah, I think so. It’s a very common villain trait: “I’ve done the things I’ve done, and thus I need to follow through on my plan, because if I don’t, I’ll have done all those things for no reason.” And, well — Thanos. Let’s talk about Vader. It just doesn’t make any sense — no, okay.
Matthew:
I don’t love Revenge of the Sith, in part because I think there’s a lot it alludes to without making clear. But some of the novelizations since then talk about Anakin realizing that once he helps Palpatine kill Mace, he has to justify that to himself. Part of the rage that drives Vader is that he gave up so much to save his family, and it didn’t work. His family died. That’s the anger that drives him, and it’s part of why he says, at one point, “It’s too late for me, son” — right before he takes Luke to the Emperor — because in his mind, the weight of that sunk cost means he can’t go back.
Paul:
Yeah, that makes a lot of sense. Of course, some of his family did survive, so it wasn’t too late — well, maybe too late for him to live, I guess.
Matthew:
I think part of his turn back to the good side is exactly because of that — he realizes it may have been worth it after all.
Paul:
For sure. Also, Maul isn’t dead — I never saw a body, he fell, he’s fine, come on. Fair enough — maybe he didn’t have enough dark side left to sustain the hate. I don’t know, whatever, anyway.
Matthew:
Sam Jackson’s not too busy to come back to a Star Wars movie.
Paul:
What I’d say about the podcasting thing you touched on is, that’s a great example of looking at the cost, especially in terms of time. Time has value — there’s nothing more valuable than time in a lot of ways, and you can’t get time back. But you choose what to spend it on, and I think seeing it as a failure if you don’t continue a podcast indefinitely, or never reach the level of reach or financial success you were hoping for — I think that view is its own kind of failure. I’ll give an example. I’ve been listening to songs I recorded around 2003, 2011, and even earlier, like ’98 — none of which ever reached a wide audience, and it’s very unlikely they ever will. At the time that felt like a commercial failure. But that doesn’t mean it actually was a failure. It doesn’t mean the time was wasted. I can still sit and listen to those songs and enjoy them. Other people listened to them at the time, or at various points since, and enjoyed them too. Bringing it back to podcasting — when you think about all the people who, over the last decade, have listened to the podcasts you’ve made and gotten something out of it, whether it’s enjoyment, thinking about something differently, or a sense of community from being part of a podcast network — that’s real value you’ve created with the time you’ve spent. A lot of times when we look at things through a sunk cost lens, yes, the time is the sunk cost, but there’s also value that’s already been created — as opposed to a hand of poker, where if you don’t win the pot, you just didn’t win the pot.
Matthew:
I was going to add another part of the value here — I’ve said this jokingly, but there’s some truth to it. When I go see something with my wife, she likes to talk about it for about ten minutes. I want to talk about it for hours. She’s said, after a movie, “Okay, I’m about ready for you to take those thoughts to your podcast — I just want to talk about it with someone, and then I’m done with it.” So chalk some of that up to mental health too. But go ahead.
Paul:
I just want to interject — I’ve also heard the words, “Can’t you just talk about this with Matthew?”
Matthew:
Yeah, and you’re not the only podcast co-host who’s said exactly that to me.
Paul:
Yeah, yeah, yeah.
Matthew:
It’s good for the marital health of all my co-hosts, I’m glad to hear it. But I’ll give another example, pulling it back to gambling — I think this also gets at how we often don’t look at all the costs, or all the benefits, and how we can shift our idea of what the goal even is. Because today, beyond the actual money spent, the cost of playing poker in some form is very low. You just need a computer and an internet connection — it’s really just time. In the past, when you and I first started playing, it might have meant taking a taxi to a shady club where you didn’t know what was going to happen, or literally traveling to Atlantic City — at that point none of us had cars, we were New York City kids, so it meant walking to the bus stop, getting on a bus, paying for the ticket, two and a half hours each way, and then waiting in the bus station for who knows how long before the bus back came. I used to call that station “the home of broken dreams” — there was one time Paul, I, and I think our friend Adam all won a lot of money at poker. We felt great. We walked into the bus station at two in the morning, and it felt like the home of broken dreams, because everyone around us looked so dejected and broken.
Paul:
And then you realize the last bus was at 1:50, the next one’s at 6:15, and you’re like, “Ah, that’s why.”
Matthew:
But so, for example — I’m about to go to Vegas for work, but I’m intentionally going a day early because I want to spend some time playing poker. There’s an additional cost to that: I’m paying extra for the hotel room. I’ll pay for the extra night, I’ll pay a lot for meals and everything else. When I used to go to Atlantic City, if I didn’t have a winning session, I’d feel very dejected — like I’d wasted the weekend, wasted the time getting there and back, wasted the money on the bus ticket. But an important shift you have to make, if you’re going to be someone who gambles, is being able to say to yourself: “What I actually did was spend a certain amount of money to have a fun road trip with my friends.” If someone says, “Let’s hop in the car, drive four hours, pay $300 for concert tickets, another hundred for the hotel, and spend eight hundred dollars total for a road trip and a couple of hours of entertainment” — as long as you’re not spending rent money, no one questions that.
Paul:
If I know it’s going to be like, “how much did you win?” —
Matthew:
Yeah, exactly. So when I think about gambling in a place like Vegas, I think of it in terms of how much I’d spend to see one of the shows, a concert — no one says, “You wasted all that money.” I got an entertainment experience. I can have a lot of fun at a poker table whether I’m winning or losing. But it’s not fun to be desperately trying to win back what you’re down. Being able to say, “You know what, I’m 50 bucks down,” or “500 bucks down, I’m going to get up and go do something else” — that’s okay.
Paul:
Yeah, for sure. It can be a fun experience — but sitting there trying to win back what you lost, I think, is generally not fun for most people, because that’s how it gets framed. It becomes binary. Either you win it back or you don’t — or maybe you win some of it back. As opposed to being able to just say, in the middle of a losing session, “That’s fine.” That’s not a big deal. You can still enjoy yourself if your mindset is either, “I’m going to sit here and make plus-EV decisions, because that’s what I do at the poker table, and in the long run I’ll make money,” or, “I’m going to sit here and have fun, and the money in front of me is the maximum it’s going to cost me.” Sometimes you make money, sometimes you lose less than the maximum — but this is your budget for this mode of entertainment. And it’s not just about enjoyment — if we’re talking about any strategy game, a game you lose still has value. What have you learned? What can you take away from what happened in the game, whether it’s poker, chess, or anything else? That’s what I was going to say, and then I didn’t, and then you said it — good. What can be extracted, what value can be pulled from the experience, in addition to any enjoyment you had. No, totally with you. Cool.
Matthew:
So why does this matter? Why is it important to think about the sunk cost fallacy?
Paul:
Just to avoid it, basically — it’s pretty simple. Don’t throw good money after bad, and evaluate each decision from the point of decision. That’s really what it is. You can kind of ignore this if you’re not that susceptible to it, but really, it’s a bias — a bias toward continuing to invest in things you’ve already invested in. If you have that bias, it’s important to recognize it — and most people do have it, and that’s okay, it doesn’t mean you’re a bad person, it means you’re a person. When you recognize the bias, it’s something to factor into your evaluation of the current circumstances: am I evaluating the present decision on its own merits, based on where I am right now, the current state of reality — or am I letting previous investments color my perception of the situation? The same way any other bias works — maybe you have a bias against a particular group of people, and if you recognize that, you can say, “Well, that’s bad, I feel bad about that.” Fine, I don’t think it’s great, but if you recognize you have an irrational bias, you can adjust for it. When you have a negative perception of a person, you can ask: is this based on something they actually did and are responsible for, or is it because they’re part of a group I have some unresolved negative feeling toward? I accept that’s part of me, but I’m not going to let my biases affect how I treat this person. Everyone has some biases one way or another. I find it a little irksome when people say “everybody has any given bias” — I don’t think that’s literally true. But it’s close to universal to have some sort of bias, just from our own experiences. We’re also existing in a world where certain things are telling us things, and we can go along with what people are telling us, or react against it, or sometimes take a fairly unbiased look at things. Being able to identify those biases in ourselves and others helps us remember to double-check — with any sunk cost type situation, anywhere you’ve invested a lot, double-check: am I assigning a bunch of emotional weight to the fact that I’ve already invested, or am I looking at it cleanly?
Matthew:
And I think that evaluation is the key, because as I said before, I do think there are situations that look a lot like sunk cost but are actually fine. Part of the idea of sunk cost is that you can’t get it back, and there’s no further loss from recognizing it as sunk and not trying to win it back. But let me give a different example. Your boss asks you to do something a certain way, you pick one particular approach, and you start to think it has only a small chance of succeeding — but you’re worried that if you stop now and do something else, you’re not sure you still can. If what you’re worried about is people laughing at you in the break room, “Ha, see, we all told you it was stupid to try to make New Coke, look at you, admitting we were right” — There’s an emotional factor there, and that’s going to sting, but do the right thing anyway. If you’re pretty clear your boss is an idiot, and if you admit you were wrong —
Paul:
I’m as lost as you are right now.
Matthew:
No, I know what I’m trying to say, let me try again. If you realize your boss is unfortunately very results-focused, and you come back and say, “Hey, I tried this thing, it didn’t work out, I’m going to try something else” — and the boss is going to fire you either way, whether you admit it now or they find out later that your approach didn’t work — you might as well keep trying the thing that has barely any chance of succeeding, because that’s your only hope in that situation. Or quit. That’s not a perfect example, but my point is that there’s sometimes a real, literal cost beyond the emotional one to saying, “I was wrong, I’m going to do something else.” Maybe a better example is what you said earlier — if it’s just your own bias, and you figure that out, please change, for the love of God. We see pretty clearly that when public figures with an admitted bias acknowledge, “I was wrong, I shouldn’t have done that” — I don’t think this happens as often as it should — but often what happens is the people who liked their bias turn on them, and the people they’re trying to align with now say, “You were rejecting us this whole time, we don’t want you now.”
Paul:
Yeah, I think that’s a real problem in the world, for sure. People need to be allowed to change.
Matthew:
I think that’s true of a lot of people, and — I’m having trouble thinking of an exact example, but I can think of a few times Zuko does this, and She-Ra even more specifically — where the hero says, “You can come join us, it’s okay,” and the response is, “No, you people are never going to trust me, they’re never going to forgive me, it’s never going to be okay.”
Paul:
And Zuko is kind of the opposite — he tries to join them, and they’re like, “We don’t trust you.” “How about I accidentally burn your feet?” “Oh yeah, that helps.”
Matthew:
Instead, everyone just goes on life-changing adventures with Zuko, except Catra — and maybe that’s why she ends up a cop. Whatever, that’s Zuko’s fault, I don’t know. Okay, we’re way off track — but my point is just that this shouldn’t stop people from stopping something terrible, but sometimes there is a real cost involved in recognizing you weren’t successful at something. That’s part of working through it — figuring out what’s an actual sunk cost versus a cost that’s recoverable, or where there’s a real potential loss from doing something else.
Paul:
Yeah, and to me that still comes down to evaluating the situation without whatever biases are at play. The fact that you’ve invested in something doesn’t mean you shouldn’t continue to invest in it. And decisions are choices between multiple options — in the boss example you gave, one option was definite or very likely failure, and the other was moderately likely failure. That’s like, “Well, moderate is better than definite or very likely.”
Paul:
So sometimes it’s a choice between multiple not-very-good options. The nice thing about poker is that folding is always zero EV — you can always just say, “Nope.” But there’s some other stuff there too. What are the actual options, what’s the spread of outcomes, and the likelihood of the various outcomes — that’s a whole other conversation, how to actually evaluate things, how to weigh best outcomes against good outcomes against moderate or neutral outcomes against bad outcomes, and the likelihood of each. People have biases around that too.
Matthew:
A lot of it’s also that in poker, there’s a very specific cost that’s numerically evaluated — the money you’re betting and winning back. But the cost of time is very different for different people, depending on their life circumstances. The cost of travel, too — one thing I didn’t recognize as early as I should have, and I’ve apologized to you before and will again: for me, traveling to Atlantic City had a food bonus, because there was fun food to get there, for a vegan whose choices, especially back then, were much more limited. Going somewhere with almost nothing you can eat, the food becomes much more of a cost than a benefit.
Paul:
Yeah, the lack thereof is definitely the cost. Hooters was not my favorite place — “I guess I’ll get the side salad.”
Matthew:
I loved the chicken wings, but yeah, there’s not much else there. I wish someone would rebrand it — give the waitresses real outfits, since I don’t care about that, I just love the chicken wings. Anyway, this is not the right discussion.
Paul:
I think there are other places for that, but also I’d be fine if they got rid of all the — you know, all the chicken places.
Matthew:
Yeah, that’s not the right answer, not the right location.
Paul:
Like Chick-fil-A — I don’t need to boycott them, I’d already prefer they didn’t exist.
Matthew:
Like, if I tell you I’m letting McDonald’s kill living creatures instead of homophobic people killing living creatures — cool, okay, we are so far off topic here. I’ll just say, actually, that’s another example I’ve heard from folks. I remember talking to someone about his teenage daughter, who’s vegan and always pressuring him to stop eating meat. He’d invested so much in arguing about it with her that he felt like giving up now would just mean she’d hold it over his head for the rest of his life. That’s a terrible reason to do something if you don’t think it’s right. Anyway — last comments on the sunk cost fallacy?
Paul:
Don’t throw good money after bad. And don’t keep killing more people, or chickens, just because you’ve killed people or chickens in the past. You can let go of your villainous schemes, whatever they may be.
Matthew:
Obviously I was making reference to Trump and Iran — I definitely think there’s a sunk cost fallacy there, although in his mind it’s probably some version of, “If I win this war, maybe I do better in the elections, and if I acknowledge what everyone else knows, I lose the election.” When you brought up Vietnam — we know from the Pentagon Papers that officials said, “We don’t think we’re going to win, but the public won’t accept that we were wrong to go in after this many losses.” I think it was John Kerry who asked, “Who wants to be the last person to die for a mistake?” That’s exactly what the American government did — spent years trying to broker a peace deal that made it look like a tie in Vietnam. Everyone knew the North Vietnamese were going to conquer the rest of the country — the exact thing we were trying to stop — within three years, which they did. It was the sunk cost fallacy: we spent all these lives, we can’t admit we were wrong. So yeah — don’t do that. That’s dumb.
Paul:
Just don’t, with the wars. The sunk cost fallacy is a bad reason to perpetuate a war, to keep it going. But the inciting incident itself — that’s maybe a topic for another day.
Matthew:
There are certainly a lot of arguments that part of what got World War One started was all the money sunk into the British and German navies, and a sense of, “Well, all those people who thought we should have bought bread instead — we’ve got to use these ships, we’ve got to prove it was worth it.” This has been awesome. We’ve talked a lot about dumb ways people spend their money on sunk costs, but I think a cost that provides great value is buying a book. There are lots of books you could buy, but there’s one in particular that’s a pretty damn good value. Paul, what would that be?
Paul:
Zen Madman’s “Friday Night Is My Monday Morning,” Volume One — a collection of my newsletter entries following my journey attempting to win a house in a thousand and one days. Subtitled “Betting the House on Poker.” It’s a multi-year journey, so this is just the first hundred — well, actually 256 — pages of the odyssey. You can find it at ZenMadman.com. There’s a link in the show description — right now the bare URL is a little glitchy, so it’s easiest to click the link in the show description, which is an affiliate link, so some proceeds go to the podcast, and you’ll also get 40% off with code SHE400.
Matthew:
Yes, please do that — it helps the podcast, it helps Paul. To be very clear, disclaimer: as Paul said, this is only Volume One, so we’re not guaranteeing that reading this book will win you a house. You have to buy all the volumes, at which point — Paul’s guaranteeing, not me — that you will win a house. I’m kidding, to be very clear, for any lawyers listening. No houses were guaranteed in the making of this podcast. Please check that out. We also recently had Pete Wright on talking about his book Lattice, and we’ll have him on again soon talking about his newer book, Onset. Links to purchase those are in the show notes as well — please take a look at all the great things being done by TruStory FM and Superhero Ethics hosts, guests, and authors. Please also check out my other podcast, Star Wars Generations, where by the time this episode comes out we will have talked about The Ninth Jedi, the anime Star Wars TV show that’s coming out and that a lot of us are excited for. And most importantly — may the force be with you when you gamble. May the fours be with you. May the force be with you.
