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AKA: "Throwing Good Money After Bad"
The phenomenon where a person is reluctant to abandon a strategy or course of action because they have invested heavily in it, even when it is clear that abandonment would be more beneficial.
The phenomenon where a person is reluctant to abandon a strategy or course of action because they have invested heavily in it, even when it is clear that abandonment would be more beneficial.
Sunk Cost Fallacy is a cognitive bias in which the phenomenon where a person is reluctant to abandon a strategy or course of action because they have invested heavily in it, even when it is clear that abandonment would be more beneficial. It occurs when loss aversion. We hate losing more than we like winning. For example, staying in a bad job, relationship, or investment because "I've already put so much into it."
Staying in a bad job, relationship, or investment because "I've already put so much into it."
High-stakes domains (medicine, law, finance) have developed entire systems to counteract Sunk Cost Fallacy. If professionals need safeguards, so do you.
This error is driven by Loss aversion. We hate losing more than we like winning..
This bias exists because human brains evolved for survival, not accuracy. Loss aversion. We hate losing more than we like winning. served our ancestors well. In modern contexts, it often misfires.
In investing: Sunk Cost Fallacy leads to holding losing positions too long or selling winners too early.
In relationships: This bias causes people to interpret ambiguous signals in ways that confirm existing beliefs about partners.
In work: Sunk Cost Fallacy makes it harder to update strategies when market conditions change.
In health: People ignore symptoms that contradict their self-image as "healthy" or "young."
Sunk Cost Fallacy has been studied extensively since the cognitive revolution. Research consistently shows that even warned subjects fall for it—awareness alone doesn't provide immunity.
Ignore the past cost. It is gone. Ask: "If I started today with what I have now, would I make this choice?"
Seek disconfirming evidence: Actively look for data that challenges your current belief.
Use decision journals: Write down predictions before outcomes are known, then review accuracy.
Consult diverse perspectives: People with different backgrounds spot different biases.
Implement decision rules: Pre-commit to criteria before emotionally charged situations arise.
Time-box decisions: Revisit important conclusions after a cooling-off period.
Some brains are more susceptible to this than others. Test your Discipline to find out.
Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux.
Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases. Science, 185(4157), 1124-1131. https://doi.org/10.1126/science.185.4157.1124
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The phenomenon where a person is reluctant to abandon a strategy or course of action because they have invested heavily in it, even when it is clear that abandonment would be more beneficial.
The alternate name "Throwing Good Money After Bad" captures the intuitive essence of the bias. Sunk Cost Fallacy is the formal psychological term, while "Throwing Good Money After Bad" describes what it feels like in practice.
Ignore the past cost. It is gone. Ask: "If I started today with what I have now, would I make this choice?"
The underlying mechanism is loss aversion. we hate losing more than we like winning.. Human brains evolved heuristics for speed and survival, not accuracy in modern contexts.
Yes. Intelligence doesn't provide immunity—sometimes it makes the bias worse because smart people are better at rationalizing. Awareness and structured decision processes are more protective than raw IQ.
Staying in a bad job, relationship, or investment because "I've already put so much into it."
