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Avoid the “Marginal Costs” Mistake

We’re taught in finance and economics that in evaluating alternative investments, we should ignore sunk and fixed costs (沉没和固定成本), and instead base decisions on the marginal costs and marginal revenues that each alternative entails (引起，需要). We learn in our course that this doctrine (主义；学说；教义) biases companies to leverage what they have put in place to succeed in the past, instead of guiding them to create the capabilities they’ll need in the future. If we knew the future would be exactly the same as the past, that approach would be fine. But if the future’s different—and it almost always is—then it’s the wrong thing to do.

This theory addresses the third question I discuss with my students—how to live a life of integrity (stay out of jail). Unconsciously, we often employ the marginal cost doctrine in our personal lives when we choose between right and wrong. A voice in our head says, “Look, I know that as a general rule, most people shouldn’t do this. But in this particular extenuating circumstance, (情有可原的情况) just this once, it’s OK.” The marginal cost of doing something wrong “just this once” always seems alluringly (诱人地) low. It suckers (吸) you in, and you don’t ever look at where that path ultimately is headed and at the full costs that the choice entails. Justification for infidelity (无信仰) and dishonesty in all their manifestations (表现) lies in the marginal cost economics of “just this once.”

I’d like to share a story about how I came to understand the potential damage of “just this once” in my own life. I played on the Oxford University varsity (大学；大学运动代表队) basketball team. We worked our tails off and finished the season undefeated (我们竭尽全力，完成了不败的赛季). The guys on the team were the best friends I’ve ever had in my life. We got to the British equivalent (相等的) of the NCAA tournament (锦标赛，联赛)—and made it to the final four. It turned out the championship game was scheduled to be played on a Sunday. I had made a personal commitment to God at age 16 that I would never play ball on Sunday. So I went to the coach and explained my problem. He was incredulous (怀疑的，难以置信的). My teammates were, too, because I was the starting center. Every one of the guys on the team came to me and said, “You’ve got to play. Can’t you break the rule just this one time?”

See you tomorrow