What is the sunk cost fallacy, and why do we fall for it?

The sunk cost fallacy is a bias in which people keep pursuing a behavior or project because of resources already put into it, whether time, money or effort. The term is tied to research by Arkes and Blumer in 1985. Dictionaries and explainers describe it as irrational when continuing is no longer the best option, and the Cambridge Dictionary compares it to throwing good money after bad. Sources cited here: [behavioraleconomics.com](https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/sunk-cost-fallacy/) and [dictionary.cambridge.org](https://dictionary.cambridge.org/us/dictionary/english/sunk-cost-fallacy). [1] [2]

In economic terms, a sunk cost is a cost that has already been incurred and cannot be recovered. If you buy a $50 concert ticket, the money is gone whether or not you attend. On that logic, only future costs and benefits should shape the decision. If you feel ill and the weather is bad, the ticket price should not tip the balance, according to [thedecisionlab.com](https://thedecisionlab.com/biases/the-sunk-cost-fallacy). The fallacy is using the unrecoverable cost to justify a present choice. [3]

Common small examples include eating a mediocre prepaid hotel breakfast, finishing a dull book, or overeating to get your money's worth. The Conversation also describes a homeowner who refuses to sell at a loss, and so misses a chance to upgrade, because he fixates on the original purchase price rather than the current one. It notes that people are less likely to quit exclusive groups the more effort the initiation took. Cleveland Clinic adds that staying in a long relationship can be driven partly by the years already invested. See [theconversation.com](https://theconversation.com/what-is-the-sunk-cost-fallacy-is-it-ever-a-good-thing-217798) and [health.clevelandclinic.org](https://health.clevelandclinic.org/how-the-sunk-cost-fallacy-could-be-keeping-you-in-bad-situations). [4] [5]

Groups can be affected too. The fallacy is sometimes called the Concord fallacy, because the French and British governments kept funding the supersonic airliner long after it was unlikely to be commercially viable. The Conversation notes, however, that most of the evidence comes from individual decisions. [4]

Explanations center on loss aversion, the finding that losses feel worse than equivalent gains feel good. Abandoning a project can feel like losing the investment, and it can bring guilt or regret. The fallacy is also linked to commitment bias, supporting past decisions despite new evidence, and to status quo bias. Another account is that the extra costs are held in a different mental account from the original purchase. Research cited by BehavioralEconomics.com suggests rats, mice and humans are all sensitive to sunk costs once they have decided to pursue a reward, and that cognitive reflection can reduce the behavior. Sources: [thedecisionlab.com](https://thedecisionlab.com/biases/the-sunk-cost-fallacy) and [behavioraleconomics.com](https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/sunk-cost-fallacy/). [3] [1]

Some sources say the tendency can help with short-term discomfort for long-term gain, such as finishing the last credits of a degree or a tedious painting job. The Conversation suggests upfront payments, such as large gym fees or a paid online course, may help people stick with a habit. It cautions that this does not work for everything, and that big spending on a wedding or engagement ring seems not to make marriages last longer. These are suggestions from explainers, not firm rules. See [health.clevelandclinic.org](https://health.clevelandclinic.org/how-the-sunk-cost-fallacy-could-be-keeping-you-in-bad-situations) and [theconversation.com](https://theconversation.com/what-is-the-sunk-cost-fallacy-is-it-ever-a-good-thing-217798). [5] [4]