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Old 30th Jun 2010, 08:41
  #301 (permalink)  
JuliaHayes
 
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Ava's logic is that, as she has lost so much by striking, she must continue to do so.

There is a concept in accounting known as "Sunk Costs", and it's about the realisation that you can't let emotion take over and pursue something to the bitter end, just because you have already spent a lot of money.

An example would be that you have spent £10,000 fighting a strike. You are offered £5,000 to stop, but you refuse because you have already spent £10,000 and the £5,000 won't cover what you have lost.

It's the wrong choice. The original outlay of £10,000 is blinding you to the clear fact that if you take the £5,000 you will be better off than you were earlier today, and that it's the best way to mitigate your position, even if you won't be better off than when you started.

The £10,000 is a Sunk Cost. It should be irrelevant to your choice now.

In short - consider everything on its own merits and ignore the past. You should only continue to strike if you think that there is a better offer coming - but don't forget that a better offer of £6,000 is really no better if it costs you a further £1,000 to achieve it.

BASSA don't recognise Sunk Costs, and soon the only thing sunk will be them
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