Why is it that when we are caught in a scam, we know we have lost money, but we still can't stop? Let the money that's already gone down the drain inflict new damage on yourself?

In fact, the reason why many investors who have been cheated finally have no loss at all is that they have not only failed to suspend their actions after losing money, but have continued to invest in an attempt to recover their losses. They do not know that the decisions they struggle to make and the bins they bite their teeth to add are calculated by crooks, which is the trap of "sunk costs".

"Sunk Costs" in Applied Psychology of Fraud

The "sunk cost" trap is widely used in scams. It is an irrational behavior in which people, once they have invested money or time in something, show a great tendency to continue investing. In essence, when people make decisions about current or future events, they always take into account historical costs incurred in the past and costs that cannot be recovered, such as incentives to continue current investment decisions because they cannot afford to lose previous investments.

Contextually speaking, if a bad decision would result in severe punishment, the party will often delay the failed project indefinitely, even if it has no result, at least to avoid being punished. Many psychologists, therefore, would attribute the primary cause of sunk costs to "loss aversion." But the more you fear losing, the more you lose. So the more initial investment you put into a project, the more likely you are to fall into the sunk cost trap.

In the field of financial investment, every investment is a sunk cost, if it fails to generate income, re-investment may not be able to return, not to mention investment fraud, cover positions will only lose more.

Step by step! The mysterious' sunk cost 'of investment scams

It can be said that wherever there is human weakness, there will be deception, and "sunk costs" test our deepest fears and self-esteem. We're all afraid of being proved wrong, and to ease the pain, we'd rather stick with the wrong decision. Because of the "unwillingness" caused by the disproportionate contribution and gain, people are trapped in the black hole of "sunk costs". At the end of the day, it's not how powerful the tricks of the liar are, but how hard it is for us to kill the capital we have invested.

Clearly, the investment sector is the hardest hit by the "sunk cost" trap. In many investment fraud cases, there are often victims who blindly trust each other, coupled with the early investment can not be given up in time, resulting in further losses.

The site previously released the "mother for her daughter blind date but fell into the investment trap, in the fake Jinlifeng cheated more than 1.5 million!" In one article, fraudsters get to know victims through "blind date", lie that they are experienced in investment, guide the operation to make a steady profit, and induce the victim to taste the "sweetness" of investment after a small amount of trial operation. After the victim was encouraged to invest more than 1.2 million yuan, it was difficult to abandon the huge principal and profits in the account, and even hid from his family to borrow money to recharge, and eventually owed a huge amount of debt.

And in another exposure case, "Long gold road! Fake Lingfeng APP: deposit, credit score, card fees can not be less!" After the victim was set into gold, at first in order to withdraw nearly ten times the profit, pay a deposit one after another, top up to enhance the credit score, but wait until the principal hit more and more, and finally more reluctant to stop, in the face of endless tricks of scammers, can only lose hundreds of thousands of dollars in vain...

In fact, irrecoverable energy, time, and even money should never be a reason to invest more in any choice.

Invest wisely! Refuse to be trapped by "sunk costs"!

Because of the prevalence of scams involving "sunk costs", the current situation, including the world's top investment experts, is not perfect in dealing with the problem of sunk costs. In addition, almost all fraudsters have carried out professional training, simulation exercises and practical operations, and ordinary people are indeed difficult to resist once they encounter.

But don't lose heart here, about how to deal with or deal with the problem of "sunk costs" in the scam, as long as you do these two things, it will certainly reduce the possibility of greater losses: first, raise vigilance, early detection of the scam, you can end the scam in advance; Secondly, keep rational, abandon sunk costs in time, and prevent greater losses.