SUNK COSTS—THE CASE OF MARK SANCHEZ. A friend called my attention to an article by James Surowiecki in the New Yorker (January 21). Mark Sanchez, the New York Jet quarterback, had a poor year, but has a guaranteed salary for next year of $8.25 million. Should the Jets treat the guaranteed amount as a sunk cost and cut Sanchez? Surowiecki cites Hal Arkes, an Ohio State University psychologist, who says that people often are reluctant to treat sunk costs as irrelevant because they are reluctant to admit there has been a mistake and that there has been waste. Arkes also says that the larger the investment in a project, the greater the belief that it will succeed. I posted several times a year ago about sunk costs, including this post which took note of what to me was a new argument. The application of that argument to Mark Sanchez would be: Even though there is new information from the 2012 season, the analyses from earlier years can still have some value. As I said in last year’s post about a hypothetical expensive outfielder, “perhaps some of the scouts who evaluated him before the decision saw some abilities that should be taken into account….”

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