Cognitively Yours

Raja R,  Author " The sunk cost fallacy may in part occur due to loss aversion , which describes the fact that the impact of losses feels much worse to us than the impact of gains. " Let us consider the following real-life examples: 1. Team selection and sunk costs With IPL season just behind us, imagine a team which had spent huge money on a player. Suddenly, he goes out of form and not playing well. Did the team bench him ignoring the costs spent on him or played him every game as they had already spent on him. 2. Bad concerts and sunk costs You go to a concert paying an exorbitant price for the ticket. The concert is unbearable. Do you listen to the concert fully wasting precious time as you have already paid for the ticket or leave the venue to utilise you time on more fruitful endeavours. Will your decisions be different, if the concert is free. 3. Break ups are hard People often decide to carry on unhappy marriages. None is willing to accept that they picked up wrong an...

Raja R,  Author "Giving-up on our long-term goals for immediate gratification, is procrastination" Imagine an NFO of a mutual fund is available for sale for two weeks and investors defer investing in it until the last day. The filing of Income tax returns of a financial year are open from 1 st of April of the next year and despite repeated extensions there is a huge rush for filing on the last day. The examination dates are known well in advance and we defer preparing for the exams until the last few days. Cricket teams chasing scores in the limited overs especially T20 tend to take the chase to the last ball and a few teams have perfected the act to such an extent that the winning runs are scored off the last ball, making the spectators frenzy and leaving them on the edges of the seats. Procrastination is often confused with laziness, but they are very different. Procrastination is an active process – you choose to do something else instead of the task that yo...