A very basic primer on deciding between Romney and Obama in November [Reader Post]
In business there is something called “sunk costs” which refers to funds that have been spent and are unrecoverable. At any given point sunk costs are irrelevant to the decisions going forward. An example of this would be a company that has spent a billion dollars building a plant and now has to choose whether or not to spend another billion dollars hiring staff and actually operating the plant. At the point of the decision the only thing that should be relevant to the decision makers is what makes best sense for the firm going forward. Does the company make more money by staffing and operating the plant or by selling it? The decision should be based solely on what’s best going forward, with no sentimental attachment to the billion dollars already spent building the plant.
