SUNK COSTS—CHASE HEADLEY AND MARK SANCHEZ.

SUNK COSTS—CHASE HEADLEY AND MARK SANCHEZ. In this post from a year ago on sunk costs, I cited an article by Baliga and Ely arguing that a determination that there are sunk costs that should be written off because of recent information can be incorrect if the original decision was based on a lot of thoughtful analysis. I summarized: “The decision makers may not recall all of their thought processes, but they may have confidence in the process and rationally conclude that their past action should enter into future decisions.” Chase Headley provides a recent example of early predictions being more accurate than later ones. Headley was originally considered a top prospect as a potential power hitting third baseman. The power didn’t show up in his early years in the majors. The Baseball Prospectus for 2012 said that Headley had stopped trying to hit home runs (Headley had hit only 4 home runs in 2012) and said that Headley would do better to stick with that approach. In the last half of 2012, at the age of 28, in his fifth full year in the majors, Headley broke out, hitting 23 home runs. At that pace For a full year, he would have hit 46 home runs and led both major leagues in home runs. The earlier scouts who thought he had the talent to be a power hitter were vindicated.

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