The concorde fallacy......

We sometimes make investments which don't pick up. Because of the many costs we have already incurred, we think that we don't have an option but to keep on trying, otherwise we lose the whole lot of investments we have already done into the project. This situation is called the Sunk-cost trap or sometimes the Concorde fallacy. The second name is derived from the failed concorde jet programme, which the government continued to 'throw in' more and more funds as to rescue the already incurred costs.

Swiftly to entrepreneurship. They say that you never learn without making a try, okay, i agree with that. It is about taking risks, meaning that there are chances of failure, frustrations and disappointments. When do you know that enough is enough? When do you sit down and say...may be this wasn't a good investment, sometimes due to a change in the business environment or poor planning?

Halfway into an investment we can face challenges, losses or setbacks. We go back to the drawing board and either decide to hold on or leave it all together. We find ourselves entrapped in a cage, where we are emotional about the resources we have already attached to the project and 'what people will think about our failures'

In such situations it is very necessary for us to do cost analysis and evaluate the potential risk of incurring even more irredeemable costs. The advise of a professional financial planner or analyst can be key as we try to establish our position, assess our chances and quantify the losses. The rule here is, don't panic. Take the lesson and go home or re-invent your project with a better and sober strategy. Do'nt let emotions carry the day.

Now to social Concorde fallacy.....sometimes we spent so much time, money and resources in a relationship that feel pulling out will be very costly. We become victims of bad marriages, courtships and stressful come-we-stays. Evaluate the situation, assess the problems, the possibilities of a better future and get yourself out of that trap.

Think future, not past, learn.....


Until next time, let us always remember the Concorde fallacy.....