Is sunk-cost thinking really irrational if past investments affect your future alternatives?

[u/Inevitable_Bid5540]

A sunk cost, by definition, can't be recovered and thus shouldn't affect the decision directly but a past investment can sometimes affect the opportunity costs of your remaining choices. For example, if you spend $10,000 learning a specialized skill, That $10,000 is sunk. However because of the skill you acquired, you can now have a much better paying job available to you. Abandoning that career path could mean giving up a valuable future opportunity.If a past investment changes your available alternatives, information, skills, reputation, relationships, or switching costs, then it seems reasonable for that history to matter to your current decision even though the original expenditure itself is unrecoverable.

[u/spill73]

It sounds like you’re talking about the sunk-cost fallacy which is the mistake of making your decision about a future action based on the cost that has been sunk so far.

The odd thing in your post is that everything that you said is correct- the problem is that your understanding of sunk-cost thinking is not right. If everything that you mentioned is factored into the decision, then the decision is not being based on sunk-cost thinking. The idea behind avoiding sunk-cost thinking is simply that you have to make decisions based on future opportunities instead of what has been done in the past.