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The Freedom of Sunk Cost

by Alan Fox 0 Comments
The Freedom of Sunk Cost

On the last day of class Richard Wicks, my law professor for Contracts, said, “By now I’ve taught you all you need to know about the elements of a contract. But today I’m going to share the final, most important, lesson.”

The hands of seventy first-year law student were poised to take that final note.

“The ultimate clause of every contract should always state, ‘And I mean it gosh darn it!’”  Professor Wicks said it more colorfully, but you get the point.

In my blog during the past eight years I’ve covered many topics, but one principle that I follow often, that deserves a return appearance, is the theory of Sunk Cost. When making a decision you should consider only the future and ignore the “Sunk Cost” of the past.

For example, imagine you are watching a movie in a theater (remember that experience?) and after the first ten minutes you are terminally bored.  But you have already paid for your ticket.  That is your sunk cost because you’re not going to get your money back.

Do you sit through the rest of the film “”to get your money’s worth,” or do you simply leave?  And what about your companions, who may want to stay?

Years ago I was at a movie with Daveen and my parents.  I found it offensive, but I didn’t want to create a scene.  I whispered to Daveen, “I’ll wait for you in the lobby. You can all finish watching the movie.”

Normally, if Daveen starts watching a movie she finishes it.  I was surprised when, ten minutes later, the three of them also walked out.

My point is, I’d already spent the money, and invested my time.  But the only real question I should be thinking about is how I want to spend the next hour.  Do I always have to finish something I paid for?  When I’m attending a sports event in person (remember that?) and my team is leading by forty points I don’t have to stay for the last five minutes of the game.  I prefer to beat the other cars out of the parking lot.

We can’t escape from the fact that our lives must be lived totally in the future.  But past experience is useful as a guide, not a prison.

I encourage you to free yourself from the tyranny of sunk cost.  And I mean it, gosh darn it.

Alan

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Bye Bye Brownies

by Alan Fox 0 Comments
Bye Bye Brownies

When I was a kid I loved to bake brownies. I would buy a prepared mix, add walnuts, and my family and I would enjoy brownies for a week. They were one of my favorite treats.

A few months ago Daveen ordered brownies, with walnuts, from a friend of hers, a teacher who became a baker during the pandemic.  The brownies were delicious, though I tried to limit myself to one (or two) a day (per meal).

Several weeks ago Daveen arrived home with a large number of boxes of brownies.

“Why so many boxes?” I asked.

“For us, and for gifts.”

“That’s great.  We’ll have lots for the holidays.”

“Yes.  But this is my last order.”

“What!? Why?”

Even though the brownies were priced at the same (high) cost per dozen they had been, each brownie in the new order was only half the original size. In effect, her friend, the baker, had covertly doubled the price – and Daveen was not pleased.

I agreed with Daveen, and even though I was disappointed I imagine I’ll be happier in a few weeks when I step on the scale.

I believe that sustainable relationships depend upon a mutual perception of equity. You expect, over time, to get as good as you give.  If a grocery store suddenly doubled its prices most people would leave and shop elsewhere.

We all make mistakes, but when you burn a bridge in a relationship you can’t reasonably expect to cross back to the other side.  I like to maintain relationships, and have had many of the same friends for most of my life.  One woman who began to work for me more than fifty years ago has retired, but she is still a trusted friend who works in my office some weekends.  Daveen and I separated in 2016.  At lunch two years later we decided, happily, to resume our relationship.

But now it’s bye bye brownies.  I certainly could still bake them myself, except…well, I must admit that I really don’t need the calories.

Have a great 2021, as we leave behind some of last year’s perils and pleasures.

Alan

 

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Pick Your Battles

by Alan Fox 0 Comments
Pick Your Battles

As December brings this year to its inevitable end, I’ve been contemplating how I might improve my life in 2021.  I’ve never been a fan of New Year’s Resolutions because mine seem to disappear moments after I make them.

In light of that, I consider instead my core values – those issues I will not compromise.  My basic core belief is that we are here to help each other in whatever way we can.

A few days ago my youngest daughter and her husband visited our home with their three dogs.  The large dog, Brady, likes to lie on the sofa in our family room.

After they left, another family member observed, “I’m surprised you let Brady lie on the sofa.  We never let our dogs do that.”

I understand her surprise.

One of my strongest childhood memories is of the constant fight I had with my dad about taking care of my cocker spaniel. The dog liked to pee all over our dining room carpet.  One day my dog disappeared.

“I gave her to another family,” my dad said.  Since the dog reappeared two days later, hungry and unkempt, I suspect that Dad just dropped her off on the street a few miles away.  The second time my dad “gave her to another family” she didn’t return.  He probably just drove a little further.  Despite feeling sad, I must admit, some part of me was relieved that my father and I would no longer fight over the dog.

I have not owned a dog during my entire adult life.  I resisted the heartfelt pleas of my children, all of whom now own dogs as adults.  To me the pleasure of owning a dog (or three) is simply not worth the effort of taking care of them.  To be clear, there are many dogs I like – as long as I don’t have to feed them, walk them, or take them to the vet after they have encountered a skunk.

But I have no core value that insists a dog can’t rest on my sofa.  While that’s not my first choice, my higher value is to welcome family and friends when they visit, and that includes their dogs.

In 2021 I plan to continue to “go along to get along.”  It works for me, and I’ve had a wonderful year with those I love.  We’ve supported each other through the pandemic, with very little friction.

When I pick my battles I don’t have many.

I wish you a Happy New Year.

Love,

Alan

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