Sunk Costs Are Alive and Well in the NFL
Week 1 is in the books and it’s time for everyone to proclaim their over or under-reactions. Here’s one I am confident in; NFL teams have yet to conquer the sunk cost fallacy.
When we talk about sunk cost, it’s hard to explain it as anything other than costs that are sunk, but here we go. Say you’re living in NYC and you have concert tickets, that you already paid for, to see Justin Bieber at MSG later that night. You purchased these tickets a year in advance and have been looking forward to this night. As you’re walking to the concert, you bump into John Mayer on the street and he offers to cook you dinner. You’ve got a decision to make, go with the concert that you’ve invested money and time in or ditch those plans for an unforgettable dinner. Going with the concert just because you invested all that time and money is a prime example of the sunk cost fallacy. Instead, you should reframe the decision as choosing between a free concert and a free dinner (with John Mayer). You’re leaving out the cost of the concert tickets, it’s a sunk cost.
Now, let’s transport ourselves to the NFL. The Chicago Bears have been rolling Mitch Trubisky out as their starting quarterback for several years now. By many accounts, he’s not the long-term solution at QB. However, the Bears traded a significant amount of draft capital to spend an early selection on him. What looks worse, rolling out your highly drafted QB and losing, or cutting your losses, implying you were wrong, and moving on to another starter? I don’t want to give the impression that this is a simple decision, these personnel decisions rarely are, but the reasoning behind the Bears’ decision should not be due to sunk costs.
Here’s a counterpoint of sorts. Last season the Patriots traded a second round pick to the Falcons for wide receiver Mohamed Sanu. Sanu played well for the Patriots before suffering an ankle injury that rendered him less effective down the stretch. Going into this season, Mohamed Sanu was on every Patriots 53 man roster projection that I saw. Then he was inexplicably cut right before the season started. It was nearly incomprehensible, the Patriots traded a second round pick for him. Bill Belichick, though, has demonstrated throughout his coaching career that he will not succumb to the sunk cost fallacy. Even if the media chided the Patriots for the move.
On a macro level, addressing our own susceptibility to the sunk cost fallacy is important. This applies to all areas of life. We all employ the same, fallible reasoning when utilizing Amazon Prime, streaming services, and even food. We all want to get our money’s worth. Perhaps instead of acting counter to our proclivities, we channel them towards getting our money’s worth out of books or gym memberships.