Sunk Cost Fallacy and Defensive Attribution.

The human brain is a marvel. But it's also amazing how it plays tricks on us, often through what are known as cognitive biases.

Cognitive biases have been discussed before, so in brief, they are systematic errors in our thinking. These are consistent patterns of thought or interpretation of information that can lead to inaccurate conclusions, faulty judgments, and poor decision-making. Cognitive biases are common because we often rely on mental shortcuts to make quick and efficient decisions. However, these biases can lead to errors in reasoning, even when all information is available to us.

Two very common biases are the sunk cost fallacy and defensive attribution.

Sunk Cost Fallacy

Although it sounds like an economic problem, it isn't. Although it can become one! 🙂 It's a problem of our brain, or rather, ourselves. We've all experienced it at least once in our lives. It's a thinking error that occurs when decisions are based on the time, money, or resources already invested, rather than on future (potential) prospects for success. This error occurs when we decide to continue with a project or activity that isn't paying off, simply because we've already spent a significant amount of time, money, or resources.

We've all had the opportunity to continue 'investing' in projects, activities, people, changes… simply because we've already invested a large amount of resources, or time, or… This cognitive error of our brain is often associated with psychological factors such as fear of failure, loss, or giving up, and the feeling that an investment is only worthwhile if a result is seen, regardless of how much it takes to achieve that result.

To avoid this thinking error, it's important to focus on the future and consider all options before making decisions. It's also important to ensure that decisions are based on realistic prospects for success, not on resources already spent.

The sunk cost fallacy is generally associated with brain function in the sense that decisions to continue 'investing' in something that doesn't pay off can be based on an emotional reaction to resources already spent. The brain can react to the loss of spent resources like money, time, and effort as an emotional loss, which can lead to a desire to continue the activity just to avoid the feeling of loss.

Furthermore, the brain may tend to overestimate the value of what has already been spent and underestimate the value of future prospects for success. This can be explained by a cognitive bias called the “Endowment effect,” which means we are more likely to overestimate the value of things we already own compared to those we don't. Honestly, many of us have tried to sell a car for double its worth, just because it's ours. 🙂

The Insula

Research has shown that the activation of certain brain parts, such as the insula, can be linked to the sunk cost fallacy. The insula is a part of the brain that's activated during emotional reactions, including feelings of loss and stress. When we face decisions about continuing to invest in something that isn't paying off, the insula can be activated, making rational decision-making more difficult.

The insula is still an active area of research, but for now, it can be said that it's a part of the brain located deep within the lateral sulcus, between the temporal and frontal lobes. The insula is connected with various functions, including the senses of taste and pain, emotional regulation, social interaction, and body awareness.

It plays an important role in processing emotions, such as shame, anger, and stress, and is crucial for recognizing and processing information about the body, including pain and hunger.

Due to its role in emotional processing, the insula is often connected with various mental disorders, such as anxiety, depression, social disorders, and addictions. The insula is also linked to cognitive processes, such as decision-making and risk assessment.

Defensive Attribution

We mainly use defensive attribution in two cases.

First, when we want to maintain a sense of control over our lives. Research shows that most of us tend to underestimate how much random events can shape our lives. In such cases, we 'force' our brain to invent some elaborate cause, thereby, in a way, downplaying the power that someone can have more or less luck in life and that some things can simply go wrong, because they can. 🙂

For example, someone was robbed or had an accident. Or simply had a heart attack. In such situations, we resort to explanations that they were robbed because, well, they went out late, or they had a heart attack because they lived unhealthily, and not because it was truly a random event. Of course, all of this is probable, but it's much simpler for us if we rationalize it in a way that it can't happen to us because we simply don't do things that way. People don't like unpredictability and randomness, because unpredictability and randomness mean uncertainty, and we don't like uncertainty.

The second case of defensive attribution is in the case of externalizing blame. In this case, defensive attribution is a psychological concept referring to the tendency to shift responsibility for failure to external factors, while attributing success to internal factors. So, we didn't fail the exam because we didn't study, but because the questions were difficult.

Generally, defensive attribution is related to psychological concepts such as self-acceptance and self-protection. It's a way we protect our self-esteem or avoid negative emotions such as feelings of guilt or shame.

Of course, using defensive attribution can lead to not taking responsibility for our actions and not working on improving our skills or accomplishments, which will consequently affect our ability to face future challenges and create a sense of control over our lives. And losing control then becomes a real problem…

Psychologists find defensive attribution interesting from the perspective of how we perceive and interpret events in our lives. This is important from education, private life to work, especially when we face challenges and have to make decisions that will affect our lives and careers.

And Once Again, the Amygdala

Defensive attribution is mainly associated with the activation of specific brain regions such as the prefrontal cortex, insula, and amygdala.

While the prefrontal cortex is linked to cognitive control, decision-making, and planning and is believed to be involved in the process of defensive attribution through emotion regulation and motivation.

Of course, as usual, emotions complicate things, so in the whole story, we have the insula with feelings of guilt and shame, and the amygdala 'connects' everything. The amygdala is also involved in emotional processes and plays a key role in responding to stressful situations. In the context of defensive attribution, it is involved through processing information about negative outcomes and assessing risk.

Training

Finally, it's important to note that cognitive biases can be recognized and overcome. Learning about these biases and being aware of their impact on decision-making can help us make more rational decisions and avoid errors like the sunk cost fallacy and defensive attribution.