+Sunk Cost
When I was in Graduate School studying Cognitive Psychology I learned about an error in decision making in Humans called Sunk Cost. Sunk Cost refers to resources, whether it be time or money or anything else, which have already been spent. The decision making error is that people tend to take sunk cost into account when making decisions going forward.
The most common example of this occurs in line waiting behavior. Think about the times you have been in a line for a long time and the line is not moving and you have other things to do with your day. If you were to walk up to the line right then and you saw that it is not moving you would decide to come back later when the wait was not so long. However, if you have already been waiting in the line for a long time, most people will continue to wait in the line, even if they would definitely leave if they were new to the line. Notice the problem here. If you were to make the decision in absence of the time already spent waiting in the line, you would walk away. But because you have already been waiting you stay because of the time invested. But that time has already been spent. It can’t be recovered. People take into account unrecoverable resources in making the decision which is completely faulty decision making. You can’t get the time back. It is already sunk.
Another common example comes from relationships. How many times have you asked someone why they are still in a bad relationship and their answer is, “Because I have so much time invested in the relationship already.” If they were to rationally view the relationship without consideration for the time already invested they would leave. But because they have time invested they stay. Again this is faulty decision making. The decision should be based on present circumstances and upside going forward. The past investment should not be taken into account.
When taking sunk cost in account, you are not just making a bad decision now but you are incurring opportunity cost. If you stay in the bad relationship because of time invested that cannot be recovered then you our costing yourself the opportunity to meet the man or woman of your dreams and get into a good relationship. If you stay in that line because you have already been waiting so long you are costing yourself the opportunity to go get other things done.
This all applies to poker beautifully. Poker players are some of the worst offenders in the sunk cost department. Each decision in poker should be made based only on the math at the decision making point. Given the information you have about your opponent’s hand and what your know about your hand you make an assessment of the probability of your hand winning (the hand odds) and then compare that to the money in the pot compared to the amount of money you will have to bet at the decision point (the pot odds). If the pot odds are greater than the hand odds you play. If not you fold (unless you can bluff but the odds of the success of the bluff get taken into account anyway). The decision comes down to pure math at that point.
But poker players tend not just take math into account. They take the money they already have invested into the pot into account as well. Players, and you know if you are an offender, will make calls that are mathematically poor if they have money already invested in the pot. This happens most often with people making calls that are too loose from the Big Blind because they already have money in the pot. Or they will make bad calls with draws on the turn because they already invested money in the pot with the draw on the flop. They want to protect their investment, protect the money they have already put in.
The problem is that the money you have already put in the pot doesn’t belong to you anymore. The minute that that money leaves your stack and goes into the middle of the table it doesn’t belong to you anymore, it belongs to the pot. Any decision going forward only takes that money into account in the terms of the pot size. Pot size is only relevant in as much as it determines the pot odds you are getting at any given time. It doesn’t matter whether the money in the pot came out of your stack or someone else’s. The pot is still the same size and the odds are still the same and where the money came from has no effect on whether a call is mathematically good or bad. But players have a tendency to falsely take into account where the money in the pot came from in assessing their decisions to play on. If they feel they have money to protect they are much more likely to do bad math and play on in situations that are mathematically disadvantageous.
And just as in the life examples there is opportunity cost to this bad decision making, so to in poker. If you call off a bunch of money in a bad spot because you erroneously take into account sunk cost in the decision making process, you are costing yourself the opportunity to earn on the money you just lost. If you are a player with an advantage, which I assume you are, then every penny you invest in a game has an earn. When you throw money away on a bad call trying to protect the money you have already put in the pot, you are not only costing yourself the money you just lost, you are also costing yourself all the money you might have earned had you still had the amount of the call in your stack.
In poker you need money to invest to make money and reducing your bankroll making a bad call to protect money that doesn’t even belong to you anymore, well that is just bad decision making all around.