Sunday 22 Jul 2018 | 01:16 | SYDNEY
Sunday 22 Jul 2018 | 01:16 | SYDNEY

Sunk costs at home and abroad


Sam Roggeveen


6 March 2008 13:29

So Joel Fitzgibbon has finally cancelled the Seasprite helicopter contract. Eleven helicopters, built and paid for, will now never see Navy service because the contractor can't get the electronics to work. Because Labor didn't make the original decision to buy the Seasprites, it was politically easier for them to escape the Sunk Cost Dilemma than for the last government, which apparently refused to cancel the deal despite the then-minister's recommendation. But let's see how brave Fitzgibbon is when a Defence contract he signs starts to go badly, as so many of them do. The more you invest (politically and financially), the harder it is to quit.

On a larger scale, the sunk cost dilemma also impedes clear thinking on America's military commitment to Iraq (although see this for a rejoinder of sorts).