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apex enterprises spent a large amount of money to customize a pumping system it bought many years ago. a supplier is now offering a new pumping system that will save the company money in the long term. however, apex decides to keep the older system because it has already spent so much money on the older system. what type of bias is this an example of?

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aamirmajeed5100

Well, this is an example of sunk-cost bias. It refers to such investment which has already been incurred and can never be recovered.

So, in the following example, if a company or a business organization has already spent some amount of money on the investment and new technology is brought into the market. The investor will not spend the amount on new technology keeping "sunk-cost bias" in context because the cost he has spent in buying the precious commodity can not be incurred.

In business, fixed and sunk costs are two distinct categories of expenses. Given that it cannot be adjusted or changed, a sunk cost is always a fixed cost. However, it is not a sunk cost because a fixed cost can be halted, such as by the sale or return of an asset.

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