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The Sunk Cost Fallacy – Digital Gabe
Digital Gabe
Cutting Edge Commentary On All Things Media

The Sunk Cost Fallacy

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*** Editor’s Note:  Today we’re featuring another guest contributor post from Pandora’s Retail Head of Industry, John Gregory.  You can follow John at @SpeakingRetail. ***

I read this article in the NYT yesterday and found it very interesting.  In applying this theory to the retail industry, it’s easy to see why the sector was so slow to change from the late 90s through the turn of the century, as Amazon was gaining prominence in the marketplace via eComm.  The legacy retailers had invested so much capital in opening stores and embedded themselves so deeply in traditional media (talent and spend), they were determined to make it work!  The study suggests most people will stay put, even though money spent in the past logically should have no bearing on the choice.

Great food for thought when considering the need to move ad content from traditional media to digital environments or innovating the merchandising/business model of retail.  Playing it safe can kill you.


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