Sunk Costs: Microsoft Throws Good Money After Bad

In Thinking Fast and Slow, Daniel Kahneman writes,

The decision to invest additional resources in a losing account, when better investments are available, is known as the sunk-cost fallacy, a costly mistake that is observed in decisions large and small.

Microsoft has already committed to mobile in a big way economically, strategically and psychologically.

Those costs are sunk.

Now, instead of admitting failure, realizing mobile has been a huge loss and redirecting resources elsewhere or towards a newly devised and better mobile strategy, $MSFT will throw 7 billion at $NOK, a former leader that has failed miserably in its own right.

Microsoft doubles down to perpetuate a myth that it is still in the mobile hunt instead of experiencing loss realization.

Sure looks like sunk cost fallacy.

ht: prism decision systems