Hammertime Day 8: Sunk Cost Faith
This is part 8 of 30 in the Hammertime Sequence. Click here for the intro.
It pains me to begin a post about planning with an announcement about two slight changes of plans for Hammertime:
First, I will be travelling the week after next, so there will be a week-and-a-half intermission between the first and second cycles.
Second, when I sat down to write a post about Focusing, I found myself unable to add anything productive to this excellent post: Focusing, for Skeptics. Focusing is probably the second most powerful technique I learned from CFAR, so I will return to it in future cycles after more thought.
Instead, I want to write three posts on planning. These are the first steps to becoming the kind of person who can make thoughtful long-term plans and follow through with them.
Day 8: Sunk Cost Faith
One of my main motivations ever since writing The Solitaire Principle is to solve the Control Problem in humans: the problem of making and following through with long-term plans and habits despite new information and, even worse, value drift. I propose that what is commonly known and vilified as the Sunk Cost Fallacy actually exists for a good reason and is a useful first-order solution to the Control Problem.
The Uncanny Valley of Sunk Cost
Related: Sunk Costs Fallacy Fallacy.
Here is the uncanny valley one falls into when one naively cancels out Sunk Cost Fallacy:
- You suck at making plans, but follow through with them anyway. You get a moderate amount done by making overconfident and poorly-thought-out plans, and just doing them despite contradictory information.
- One day, you learn about the Sunk Cost Fallacy. You decide to be a Good Rationalist and categorically abandon ship on projects that no longer appeal to you. You still suck at making plans. All your plans fail and you get nothing done.
- Over time, you learn that you’re not the kind of person who can follow through with long-term projects. You jump from bright light to bright light, captured by the briefest caprice. You don’t remember what it’s like to be diachronic. Your time horizon shrinks and you stop bothering with plans at all.
There’s an extremely insidious demon hiding at Step 2, related to adverse selection. Over the course of a multi-year (or multi-day, for that matter) plan, all sorts of noisy information can arise. Imagine your valuation of the project to be something like a Brownian motion bouncing around due to new information that slowly converges towards the “true value.”
If at any point the current valuation of the project randomly walks under the Worth It line, you’ll promptly give up the project.
Because of the noisiness of information, following the strategy of “give up whenever it falls below the Worth It line” will make you give up on many projects that actually turn out to be Worth It, just because a long random walk will always usually fall quite a bit below the mean at least once.
And this doesn’t even take into account all the motivated reasoning and other reasons that shiny new projects putter out of momentum.
Sunk Cost Faith
I think the Uncanny Valley above is a serious and common failure mode in the rationalist community, and one that happened to me.
My diagnosis is that one should not fix one’s Sunk Cost Fallacy without first learning to make strong, fault-tolerant plans, and that one cannot learn to make strong, fault-tolerant plans without the data that comes from following through on bad ones. Therefore, the first step towards becoming good at planning is restoring your Sunk Cost Fallacy and use it to follow through on bad plans. This move I dub Sunk Cost Faith – faith that your past self made good decisions. Faith, of course, because it’s entirely unjustified.
If you find yourself in the position described in the previous step, pick up your Sunk Cost Fallacy again and turn it into Sunk Cost Faith. Build yourself into a diachronic person. Follow through on your plans even after they no longer appeal to you. Expand your time horizon to the scale of months and years so that you’re the kind of person who can actually do things.
Once you can actually follow through with plans again, only then can you get better at planning. This will involve explicitly building into your plans defenses against the dark side of Sunk Cost Fallacy, defenses such as unambiguous ejector seats.
Faith in the Past
Today’s exercise is directed at people who find themselves giving halfway on projects too frequently.
Pick a completely useless activity (be creative!) that takes about five minutes, and do it every day for a week with Yoda Timers.
Convince me that I’m wrong about Sunk Cost Fallacy and it’s actually just bad.