When it comes to Sunk Costs, don't let your financial well-being go down with the ship.

We've all been there. You're staring down at what was once a beautiful plate of delicious (and spendy) food. There are a few scrumptious bites left, but you feel like one more fork-full will put you over the edge. But you have to finish the plate to get your money's worth, right? This interactive game from Marginal Revolution University will test your ability to leave sunk costs behind. 

Questions:

• What is a sunk cost?
• Can you give an example of a sunk cost from your own experience or from a hypothetical situation?
• How should sunk costs be treated when making financial decisions?
• Why might it be challenging to ignore sunk costs?
• Have you ever bought something that didn’t meet your expectations, but you continued to use it because you paid for it? Reflect on how the concept of sunk costs influenced your decision.
• How can the concept of sunk costs apply to time investment, such as staying in a club or activity that no longer interests you? Discuss the parallels between financial sunk costs and time as a resource.
• Can the idea of sunk costs apply to relationships or friendships? Give an example of how sunk costs might influence someone’s decision to stay in or leave a relationship.

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Be sure to check out NGPF's Behavioral Economics unit for lessons, activities, and more!

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Looking for more interactive resources? Be sure to check out the NGPF Interactive Library. 

About the Author

Ryan Wood

Ryan is the Partnerships and Adoption Manager for Next Gen Personal Finance’s midwest region. He brings his experience as a former teacher, curriculum designer, and sales and marketing professional to state organizations and school districts in supporting the implementation of their personal financial education efforts. He graduated from the University of Wisconsin-Green Bay and earned his teaching credential from Saint Mary’s University in Winona, Minnesota. He proudly taught at two rural high schools in Wisconsin before transitioning to curriculum design at NGPF, and is now excited to be on the front lines in delivering the best possible financial education in the midwest. He and his wife have three beautiful daughters, each of which inspire him to share the impact of being sound financial stewards both at home and as lifelong learners.