I have a problem. I hate wasting food. I'm not sure when I became obsessed with cleaning my plate off, but somewhere back in the development of my psyche or the DNA of my hunter-gatherer ancestors, the urge to make sure food didn't go to waste got stuck deep in my gut. And that is the problem, all that extra food gets stuck on my gut. My desire to ensure that every french fry and chicken nugget is consumed from the Happy Meal is irrational and not in my health's best interest and certainly not worth "saving" the $3.99 by consuming the oil-saturated starch and faux-chicken while sucking down the watery dregs of the soda.
My desire to "save" money by eating fast food that I've already wasted money on buying is what is known in economics, Wikipedia and psychology as the sunk cost fallacy. The examples of the sunk cost fallacy surround us. Our 10-year-old was given $20 for food at Lagoon this summer, and he spent nearly all of it on a carnival game. The entire Midway at Lagoon is designed on the sunk cost fallacy. You've already blown $5 on tossing balls or throwing darts and that money's lost if you don't try again -- and you were so close last time.
The fallacy arises out of our fear of loss. Loss aversion is part of the human condition. Losing a $20 bill is more traumatic than the momentary thrill of being given a $20 gift card. Carried to an extreme, the sunk cost fallacy can lead to unnecessary financial losses, more pounds around the waist line or very large and expensive stuffed animals.
The irony is the desire to avoid waste and loss is an admirable character trait that should be cultivated. The carnival games are great educational tools at relatively small costs on learning to cut your losses, because even though it appears easy, you can never really get the softball to stop its momentum inside the peach basket.
But how does the sunk cost fallacy relate to the law? People (and institutions) often equate justice with being made whole and recovering past losses. This can lead to illogical action and costly litigation as both sides indulge in the sunk cost fallacy. The adversarial nature of the legal system tends to amplify the illogical and irrational in the battle for justice. Yet our civil legal system is about allocating justice through a judgment in dollars, rather than judgments of moral superiority.
Ask any attorney and her or she can provide numerous examples of clients who have pursued a legal course of action in an attempt to achieve justice that was against the attorney's advice and at great cost. Divorce cases are rife with this type of behavior, often to the long-term detriment of everyone involved.
And individuals aren't the only ones who act this way. In my own practice, I see large financial institutions routinely making decisions that cost them money because they don't want to receive anything less than the original agreement, even when some is better than none.
The role of the attorney is often to instruct clients not just on the law, especially when they suffer from the sunk cost fallacy and their sense of justice and desire to avoid loss is not assisting the client's best interest. In other words, to provide a rational, independent view to the client, like when my wife reminds me that I'm suffering from the sunk cost fallacy when I'm eating the kids' french fries and nuggets.
E. Kent Winward is an Ogden attorney. He can be reached at 801-392-8200 or email@example.com.