CABAL

Handshake betrayal: Will Raila fall into the sunk cost trap?

This week, we witnessed a potential sunk cost fallacy with the infamous BBI handshake

In Summary

• Many have asked, ‘Baba ataambia watu nini?’ should he proceed to withdraw from the handshake and the BBI process, given all the political capital he has invested so far.

• This is the wrong question. What Raila has already invested in this handshake is not redeemable, whatever he does. It is a sunk cost.

President Uhuru Kenyatta and Opposition leader Raila Odinga outside Harambee House for the handshake on March 9, 2018.
President Uhuru Kenyatta and Opposition leader Raila Odinga outside Harambee House for the handshake on March 9, 2018.
Image: JACK OWUOR

“Because we will look like dopes if we do not do this after promising it for years”.

This reasoning was advanced by former President Donald Trump in 2017 to his fellow Republican lawmakers during the final vote on the Affordable Care Act [Obamacare]  repeal which failed, and its tax reform bill, which passed.

The tax plan was distinctively unpopular amongst a majority of Americans with only 30 per cent in favour.

Questions were raised as to why the Republican Party would pursue and support such an unpopular policy.

The reasons given included that the Republican lawmakers believed in this policy, despite its unpopularity; and that they were also worried about the backlash they would get from conservative donors if they did not back it.

However, President Trump’s reasoning seemed to reflect reality more accurately.

By worrying about how their voting base would view them, if they reneged on their promises, he advanced a decision-making bias to escalate a commitment made to their voters. This was without due consideration of its utility at the present time or future.

In economic-speak, this is known as the sunk cost trap or sunk cost fallacy. It occurs when people pursue a questionable course of action to the end.

Not because it is the prudent thing to do, but simply because they have already invested time, resources, reputation, effort, money and political capital into it.

It is like stuffing yourself on the big meal that you ordered to the point of retching, simply because you paid for it, or sitting through a terrible two-hour movie simply because you paid for the ticket.

This week, we witnessed a potential sunk cost fallacy with the infamous BBI handshake between President Uhuru and ODM leader Raila Odinga.

The latter’s foot soldiers were threatening to withdraw from the handshake, citing interference by what they called a cabal of high-profile public servants to undermine the handshake and the BBI process.

They alleged there is a sinister plot to sideline Raila from the BBI and from the 2022 succession narrative. Allegations from other sources state that the  establishment prefers to endorse a ‘safer’ Gideon Moi and Musalia Mudavadi duo.

In sunk cost fallacies, the more you invest, the harder it becomes to abandon an idea or project that is no longer viable.
Susan Mugwe, political economist 

And to make good their threat, ODM held a political rally at Kamukunji grounds that was meant to indicate the reemergence of political confrontations similar to those experienced prior to the handshake.

It has since been reported that the withdrawal threat level has been de-escalated after President Kenyatta’s lieutenants reached out to the ODM senior brigade to amicably address the concerns that triggered this development.

Begs the question. Will ODM fall into the sunk cost fallacy?

Will they allow the investment they have made in the handshake, particularly their reputation and political capital, to determine the utility of their continuous engagement in a stake that appears to have ceased being exclusive?

In sunk cost fallacies, the more you invest, the harder it becomes to abandon an idea or project that is no longer viable. And this is more damaging if the investment is of a political nature.

Sunk costs should never form part of your decision-making because future costs can change while sunk costs cannot. Therefore, the latter should never form any part of your decision-making going forward. Allow me to unpack this for you.

Imagine you have invested Sh10 million in the development of a prototype product, and you are very close to the tail end of its final finish. You only need an additional Sh50,000 to complete it, get it working and out into the market.

Just before you inject the additional money required, you learn that one of your competitors has brought into the market a far superior similar product, and they are already selling it at a price lower than you had intended to pitch your product.

Your marketing team informs you that you will not be able to recoup the costs already invested, given the superiority and popularity of your competitor’s product. Would you still invest the additional Sh50,000?

If your choice to invest the additional money is predicated on what you have already invested, you will have fallen into the sunk cost fallacy. And this is a huge mistake.

Because whatever you do, you will never recoup the sunk cost. And the additional investment is nowhere near adequate to dislodge your competitor’s vantage position.

Hopefully you now understand why our government sometimes makes questionable decisions such as pursuing expensive infrastructure projects long after they have been exposed as obsolete or unprofitable; or why they escalate commitments to armed conflicts in which they have suffered many casualties. But I digress.

Many have asked, ‘Baba ataambia watu nini?’ should he proceed to withdraw from the handshake and the BBI process, given all the political capital he has invested so far.

I submit that this is the wrong question. What Raila has already invested in this handshake is not redeemable, whatever he does. It is a sunk cost.

Like President Trump, to simply proceed so as not to look like a dope or to save face, is to throw good money after bad money. And that would be an irrational choice that can only produce a worse return on investment.

No matter the level of behind-the-scenes persuasive sentiments proffered by Uhuru’s confidantes, the emerging undertones by the so-called high-profile public service cabal should give Raila pause.

This is because in the standard account of rationality, his decisions should be made purely on the basis of the knowledge that the hitherto standing assurance by the establishment, of his exclusive ascension to the throne, has reached its sell-by date.

The endorsement field has just been made more inclusive. After all, isn’t that what the spirit of the BBI is?

Finally, my unsolicited advice is to Raila. The invisible man is not invisible because he doesn’t exist.

He is invisible because you choose not to see him. Likewise, the undertones of the secret cabal will not disappear because they have been retracted, or because you have been persuaded to think otherwise.

They will appear to be non-existent because you have chosen to ignore Jeremiah 13:23.

Politicians have never been known to suffer constipation from eating their words – Churchill