Watch for
Using the phrase "we have come this far" as the main reason to continue.
Decision & ChoiceBias #06
Sunk Cost Fallacy
Past investment can trap future judgement.
The tendency to continue an endeavour once an investment of time, money, or effort has been made, even when continuing is not the best decision going forward.
Why it matters: A classic bias in behavioural economics that explains failed projects, bad relationships, and poor investments that persist far too long.
Try this
Ask what you would do if you had not already spent anything.
Real-world example
Someone keeps watching a bad film because they already paid for the ticket.
Key researchers
Daniel Kahneman, Amos Tversky, Richard Thaler
First described in 1980
Psychological mechanism
Loss Aversion and Ego Defense. Admitting defeat requires facing an immediate psychological loss and threatens our self-identity of being rational and consistent. To avoid the pain of regret, we throw good resources after bad, hoping to miraculously justify the past investment.
Seminal research
Hal Arkes and Catherine Blumer (1985), "The psychology of sunk cost," published in Organizational Behavior and Human Decision Processes.
Related Biases
Below is a realistic scenario. Read it, then choose what you would do. The feedback will show whether a cognitive bias influenced your choice — not to judge, but to reveal the pattern in action.
Thought Experiment
This experiment places you in a realistic decision. Your instinctive choice will reveal whether bias is at work.
STEP 1 → ReadSTEP 2 → ChooseSTEP 3 → Reveal
Debrief
The sunk cost fallacy feels like a trap because walking away feels like admitting failure. But continuing to invest in a failing course is not perseverance — it is throwing good resources after bad. The discipline of ignoring sunk costs is one of the most valuable decision-making skills you can develop.