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In this video I introduce the sunk-cost fallacy, which is when we make present decisions based on previous investments which aren't relevant. This fallacy can occur in the form of gamblers or investors who make increasingly risky decisions in order to make up for past losses. Tversky and Kahneman have suggested that part of the reason for this fallacy is that people tend to keep separate mental accounts of the costs of things, which then causes them to do things to even-out those accounts rather than thinking rationally of a single mental account.

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Daniel Kahneman - Thinking, Fast and Slow (Amazon)
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