Give two hypothetical examples of sunk-cost fallacy (SCF) and hidden-cost fallacy (HCF) from real life (1SCF + 1HCF). Explain briefly and clearly why your example is SCF or HCF. Examples of Sunk-Cost and Hidden-Cost Fallacies

Examples of Sunk-Cost and Hidden-Cost Fallacies

The sunk-cost fallacy (SCF) and hidden-cost fallacy (HCF) are two common cognitive biases that can lead to irrational decision-making. This paper will provide two hypothetical examples of each of these fallacies from real life and explain why each example is an SCF or HCF. An example of an SCF can be seen when a person continues to use an old, outdated computer that no longer meets their needs. The person may be hesitant to upgrade to a newer model because they invested a large sum of money into the old one. Although the old computer may be outdated and not meet their needs, the person may still choose to stick with it due to their prior investment. This is an example of SCF because the past costs that have been invested into the computer should not influence the decision of whether to upgrade or not, rather the decision should be based on whether the new model meets the needs of the person (Mooradian & Cowen, 2020). An example of an HCF can be seen when a person is shopping for a car and fails to consider the ongoing maintenance costs of the car. The person may focus. Cont…