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When Hari Singh requested India’s help after he was outnumbered by militants in Kashmir, why didn’t Indian leaders ask him to approach UN? Why did they swallow the mess of J&K instead?

What did India get in return: insurgency, militancy, separatists, article 370, liability to maintain a huge army to keep things under control, etc. Do you think it is a textbook example of sunk cost fallacy for India?

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    I'm having a hard time seeing how this is related to sunk costs. Can you elaborate a little more? What costs were sunk and what unsunk costs did India incur that they would have avoided? – The Pompitous of Love May 22 '16 at 13:32
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    Costs in terms of frivolous legislations, costs in terms of periodical bounties to state by the centre, cost to maintain a large portion of military (I have heard army gives special incentives to recruits who are on J&K duty), persistent damage incurred by endless insurgency, negative cost of the state's under-development due to its special laws, lack of law and order, constant fear, religious tension, externally backed but homegrown separatists, cost of all futile efforts to ''resolve" Kashmir issue, cost of wars with Pakistan and China, ... The list grows. – Vivekanand P V May 23 '16 at 3:02
  • Ok. I guess maybe I don't know about J&K to answer this, but which of those costs were sunk? Or perhaps which did the Indian government think were sunk? I guess what I am getting at here is in order for this to be a sunk cost fallacy, there has to be a miscalculation surrounding costs paid, and the value added of costs yet to be paid, and while I can see the costs clearly, I don't know which ones were sunk, and which ones weren't, and what the government of India thought about each of them. – The Pompitous of Love May 23 '16 at 3:15
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    All of these costs are sunk. It's crystal clear that India would keep spending enormous funds just to keep the status quo. Indian government hopes the issue will be resolved miraculously. So, it justifies the expenditure as the part of some state ritual. The matter has become far more complex especially since the issue was referred to UN. Plebiscite is now a taboo in Indian politics. – Vivekanand P V May 23 '16 at 3:35
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    Based upon that comment, you are actually not talking about the annexation during the partition, but the maintenance of J&K currently. I have changed the title to reflect that. – The Pompitous of Love May 23 '16 at 13:29
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The unwillingness of India to consider independence or cession of Jammu and Kashmir is unlikely to be an example of the sunk cost fallacy.

What is the sunk cost fallacy?

The sunk cost fallacy occurs when the agent relies upon already paid, or sunk, costs in their calculation to make that calculation rational.

Why India is not engaged in the sunk cost fallacy in Jammu & Kashmir

They need not rely upon past costs to make their calculation rational, because the costs and benefits of changing policy are indeterminate.

While there is no doubt that India is paying a steep cost for its policy of retaining Jammu and Kashmir, it is not at all obvious that changing policy will result in a future decrease in those costs that would be commensurate with the decrease in benefits. In fact, given that the networks for insurgency are well established, the militants who are currently attacking India might continue to do so, and might even be emboldened by success in forcing India to withdraw. Additionally, India would very probably pay an audience cost with the nationalists for abandoning an area they see as part of the Indian homeland as this other SE answer shows.

None of this is to say that cession of Jammu and Kashmir wouldn't be a preferred policy, only that the benefits and costs are relatively indeterminate, and consequently unlikely to rely primarily or solely upon the Sunk Cost Fallacy. Instead, there is more likely a status quo bias, based upon large uncertainties surrounding changes in course of action. Even if the government is calculating based upon uncertainty, they may still be using sunk cost fallacy argumentation in their rhetoric, and that would be an interesting addition, or separate answer.

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What is the sunk cost fallacy?

Cambridge Online Dictionary

the idea that a company or organization is more likely to continue with a project if they have already invested a lot of money, time, or effort in it, even when continuing is not the best thing to do

Behavioral economics

Individuals commit the sunk cost fallacy when they continue a behavior or endeavor as a result of previously invested resources (time, money or effort) (Arkes & Blumer, 1985).

Example

  1. Individuals sometimes order too much food and then over-eat ‘just to get their money’s worth’.

  2. A person may have a $20 ticket to a concert and then drive for hours through a blizzard, just because she feels that she has to attend due to having made the initial investment.

If the costs outweigh the benefits, the extra costs incurred (inconvenience, time or even money) are held in a different mental account than the one associated with the ticket transaction (Thaler, 1999).

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Do you think it is a textbook example of sunk cost fallacy for India?

No. Its not about any fallacy. Its entirely about national security and pride. Think about the following points:

  1. Landmass: The area of Indian controlled Kashmir is 222,236 km². To put things into perspective, the area is bigger than the size of Belarus.

  2. Strategic value: Four major rivers (Indus, Jhelum, Chenab, Sutlej) flow through J&K from the Himalayas to Pakistan which are Pakistan's lifelines.

  3. Economy: J&K is a major and popular tourist destination.

  4. Honor and pride: Its ingrained in the nature of human beings that they are prepared to fight and even die for honor and pride. From Japanese Harakiri to Hundred Years' War, human beings showed how important pride and honor is. One of the modern examples is Abu Musa island. Latest example is Imia island (two micro uninhabited islands).

  5. National security: Firstly, if J&K cedes from India, at least seven other states, aka, Seven Sisters (Arunachal, Assam, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura) of India will cede as they are already experiencing cessation movements and rebellions. Secondly, it is not guaranteed that Pakistan and China will stop stirring up more troubles for India even if India accepts J&K's independence.

  • "Its ingrained in the nature of human beings that they are prepared to fight and even die for honor and pride." - Actually, you have to go to great lengths to instill this feelings in humans. Neither can it be seen in animals, nor deducted from the observations of stone age populations. Humans seek to avoid humiliation, but it takes a large amount of education/propaganda to make them feel humiliated when their country loses a landmass they did never visit, let alone inhabit it. No nature, just nurture. – Thern Apr 23 '18 at 8:42
  • As you said, they fight for food or sex. Very practical things. Where do honor and pride come in? A male lion that is defeated in the fight loses his access to female partners that also provide him with food, so it is an existential question. No pride involved, and surely no honor (the first thing a winning male lion does is killing the offspring of his predecessor). – Thern Apr 24 '18 at 12:06
  • Re: "No. Its not about any fallacy. Its entirely about national security and pride. " Isn't all pride a sunk cost fallacy? – grovkin Apr 25 '18 at 3:01
  • @grovkin, Yes. But, not all security. – user17569 Apr 25 '18 at 4:55

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