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Set 4: Central Ideas (Intermediate)

Explanation

Answer: B

PASSAGE

The following text describes the 'Sunk Cost Fallacy'. The sunk cost fallacy is a cognitive bias that manifests when an individual continues a behavior or endeavor as a result of previously invested resources (time, money, or effort), even if the current costs outweigh the benefits. For example, a person might finish a boring movie simply because they paid for the ticket. Rationally, the money is already gone ('sunk'), and spending more time on an un-enjoyable experience only increases the loss.

Why is the sunk cost fallacy considered irrational?

A. Because it ignores future benefits in favor of past losses
B. Because it bases decisions on unrecoverable past investments✓ Correct
C. Because it prevents people from ever finishing tasks
D. Because it always leads to financial profit

Detailed Explanation

Choice B is correct. It explains that the money is 'already gone' and shouldn't influence current decisions, yet the fallacy bases behavior on 'previously invested resources.'

Key Evidence:

• "result of previously invested resources"

• "money is already gone ('sunk')"

Why others are wrong: A (Slightly misstated (it prioritizes past loss over current logic)), C (Opposite (often causes people to finish things they shouldn't)), D (Opposite).

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