The Sunk Cost Fallacy

What The Sunk Cost Fallacy means

The sunk cost fallacy is the error of letting costs that have already been paid, and cannot be recovered, influence a decision about what to do next. Only costs and returns that differ between the options can decide between them, and what has been spent so far is the same whichever way we go. Owning this changes the question we ask at every crossroads. We stop asking what we have put in and start asking what is still to be paid and what is still to be gained from here. We notice that walking away turns a quiet loss into a felt one, and that staying keeps it unfelt, which is why the pull to continue grows with every unit we add. Before, stopping looked like waste. After, continuing is the waste, because the past is gone either way and only the future is being spent.

The Sunk Cost Fallacy examples: where it shows up

• At work: a team keeps a two-year-old system that is slower than the alternative, and the two years are mentioned in every meeting as if they argued for either side.
• With money: a falling share is held because selling would make the loss real, when the loss is already real and only the next move is still a choice.
• In the news: two governments fund an airliner for years after both know it will never pay back, because the sums already spent make stopping look like failure.

Where it sits

Open to walk. See where The Sunk Cost Fallacy sits on the sky →

Nearest on the sky

• Amor Fati
• Cognitive Dissonance
• Commitment and Consistency
• Disposition Effect
• Expected Value
• Hindsight Bias

A filled dot marks a star that is already open to walk.