The Why #37: Why can’t I tell my hairdresser my haircut sucks?
I hear you Jenni. No seriously, I do. Back in 1994 I’d be in to see Nemi at The Mane Event (yes, the same place my mum had her hair cut and permed) at least once every six weeks. Nemi could do it all. From flat tops, to undercuts and even an especially enthusiastic set of highlights that almost got me suspended from school, he really had it covered.
Except when he didn’t.
Sometime’s he’d go too short and leave me looking like Bros. Other times he’d get heavy handed with the mousse, making me an unsuspecting, 80’s themed fire hazard. Regardless, once he grabbed that mirror and proudly showed me how my head looked from the back, the only words I could ever muster were ‘awesome’, ‘looks good’ or ‘rad’.
But enough about my hair Jenni, let’s talk about yours.
I get it. You’ve been seeing this guy for years. You took the time to re-book your regular appointment a month in advance, you’ve driven through four suburbs at peak hour to get there, and sat stoically in a small chair, making awkward small talk for close to three hours. Then comes the big reveal and it’s a mess. Horrific. A disaster.
You asked for a trim and highlights. Why does your reflection have a new bleached bob?
Even worse. Why are you smiling, nodding and saying it looks great?
I know what you’re thinking and no, it’s not just a fear of confrontation or your good nature that doesn’t want you hurting someone’s feelings. What’s at play here is something much deeper.
Sunk Cost Fallacy
In economics, a ‘sunk cost’ is an expense that’s already been incurred and can’t be recovered. In behavioural economics, the Sunk Cost Fallacy describes our tendency to follow through on an endeavour if we have already invested time, effort, or money into it, whether or not the current costs outweigh the benefits.
In economics, a ‘sunk cost’ is an expense that’s already been incurred and can’t be recovered. In behavioural economics, the Sunk Cost Fallacy describes our tendency to follow through on an endeavour if we have already invested time, effort, or money into it, whether or not the current costs outweigh the benefits.
In 1985, two researchers by the name of Arkes and Blumer put the Sunk Cost Fallacy to the test when university students were sold tickets to the theatre. The tickets were assigned at three different prices; the standard price ($15), a small discounted price ($13), or a large discounted price ($8).
By tracking the attendance of each participant, Arkes and Blumer were able to identify that theatre-goers attended more plays if they paid more money for the tickets. While in one respect, this feels obvious, in reality, it makes no objective sense. The money has been spent, and won’t come back whether the students attend the show or ditch it for a better option. Despite this, paying more for the ticket (ie having a greater sunk cost) caused more students to stick with their plans.
Similar research has been conducted with ski vacations, gym attendance and even the Singaporean car market, all with consistent findings.
If you’ve ever wondered why you sat through a terrible movie, finished the entire plate of a crappy dinner you spent two hours cooking, or stayed in a long term relationship that you knew was doomed, now you know. Too much investment to just walk away.
Don’t worry, the Sunk Cost Fallacy doesn’t mean you’re destined for a lifetime of underwhelming haircuts. There’s a mix of art and science in being aware of your sunk costs and knowing when to say when. Hoisting a red flag when your haircut is only half-way bad might feel awkward but is a far better option than months of frosted-tip regret.
For brands, sunk costs offer a great way to usher customers through a process or to stay committed for longer. If you can get people investing early — even just a little bit — they’ll feel compelled to see it through. Showing the progress on forms or application processes, creating a prepaid balance system or letting users start to customise or personalise from the outset are all ways to have them saying ‘awesome’, ‘looks good’ or ‘rad’ from the get go.
Behaviourally Yours,
PS If you missed the last edition, you can still check out why everyone is playing Wordle here.
Bad Decisions Podcast
Learn more about the Sunk Cost Fallacy in episode 11 of the Bad Decisions podcast.
Got a question?
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Want more?
Read Dan’s piece in Smart Company on Pack an overnight bag: the return of business travel is imminent
