How Dia Gets Its Groove Back

Tyler Green and Richard Layoco both write today about next steps for Dia. Green writes, "In theory it could re-open in Chelsea, though if that were a likelihood it seems as if Dia already would have done that."

But think about the sunk costs at work. There's good reason to believe that Dia hasn't considered with clear eyes the option to suck it up and move back into its sweet Chelsea pad. The gambler at the race track whose just put his $2 in on a horse is more confident than ever that he's picked the winner—once a cost is sunk, confidence in the cost rises in order to diminish post-decisional dissonance. (This is called overly optimistic probability bias.) Dia left Chelsea and missed its best opportunity for a new space (the High Line elevated park in the meat-packing district). Of the options remaining, Chelsea is still the best. Since Dia hasn't ruled it out, it tells me that they're saving face and holding out for a different location, even if it's an inferior one—a twist on the loss-aversion fallacy.

Dia may be wed to saving face—but why would Weiss be? Another characteristic of the sunk-cost heuristic is the requisite of personal responsibility, which describes the relationship between investment and assumed responsibility. Weiss brings to the foundation fresh eyes and, most importantly, no responsibility for its previous decisions or commitment to seeing them through. He can say what Michael Govan couldn't: It was a mistake to leave Chelsea, and it's a mistake not to go back.

There may be a perfectly sound reason why Dia can't go back—I haven't heard one, but I'll let you know if there is.

Apologies to those students who did not realize that they had enrolled in the economics seminar. If today's lesson was an insult to your intelligence, the graduate section is down the hall.