I believe there is a reason the sunk cost fallacy exists, instinctive behavior patterns come from millions of years of evolution, and I believe that if they were totally wrong, they would have been selected out.
For example, imagine you are a predator, chasing some prey, on the way, you see a prey that looks easier to catch, the "no sunk cost" solution is to stop the chase and go after the new target. Then you see a new one, then a new one, then a new one, etc... In the end, you will probably be to busy changing targets to catch anything. That behavior is commonly exploited, just look at kids playing tag, taunting "it" by putting oneself in relative danger is a common strategy, and the counter is to ignore the taunt and focus on a target, even if it is not the easiest one, i.e. honoring sunk costs.
And the $500 proposal for the $55 ticket doesn't make it a $500 ticket. When you buy a ticket, you pay the price of the ticket, plus everything that goes with it: free time, getting there, uncertainty and risk, and all the emotional investment that is harder to quantify... Imagine you value that at $500, so including the $55 ticket, that's a $555 experience, the reason you wouldn't have bought a $500 ticket is that it would have made it a $1000+ experience.
And here you see why refusing the $500 proposal is not necessarily a mistake. The guy is offering you $500 for a $555 experience.
So yeah, good to know about the sunk costs fallacy, but I believe it is also important to understand why that "fallacy" exists, and how to properly evaluate costs, even those without a clear price tag attached to it.
Alternatively, the sunk cost fallacy is a heuristic that compensates for the fact that calculating marginal value (especially in high-pressure settings) is hard.
Evolution has also selected for more powerful brains that allow us to develop more sophisticated frameworks (e.g. law, science) for reasoning than pure emotion.
I think a simpler way of explaining that is simply to say that many people fail to recognize sunken costs because most costs are not sunken. It’s usually appropriate to consider past costs, and it takes effort and intention to recognize which costs are sunken.
For example, imagine you are a predator, chasing some prey, on the way, you see a prey that looks easier to catch, the "no sunk cost" solution is to stop the chase and go after the new target. Then you see a new one, then a new one, then a new one, etc... In the end, you will probably be to busy changing targets to catch anything. That behavior is commonly exploited, just look at kids playing tag, taunting "it" by putting oneself in relative danger is a common strategy, and the counter is to ignore the taunt and focus on a target, even if it is not the easiest one, i.e. honoring sunk costs.
And the $500 proposal for the $55 ticket doesn't make it a $500 ticket. When you buy a ticket, you pay the price of the ticket, plus everything that goes with it: free time, getting there, uncertainty and risk, and all the emotional investment that is harder to quantify... Imagine you value that at $500, so including the $55 ticket, that's a $555 experience, the reason you wouldn't have bought a $500 ticket is that it would have made it a $1000+ experience.
And here you see why refusing the $500 proposal is not necessarily a mistake. The guy is offering you $500 for a $555 experience.
So yeah, good to know about the sunk costs fallacy, but I believe it is also important to understand why that "fallacy" exists, and how to properly evaluate costs, even those without a clear price tag attached to it.