THE SUNK COST FALLACY
The Sunk Cost Fallacy Why Keep Holding On? The Cost of Looking Back Human beings often find it difficult to walk away from something after investing time, money, or effort in it. We may continue with a bad decision simply because we have already put so much into it. This is known as the sunk cost fallacy. A sunk cost is a cost that has already been paid and cannot be recovered. Yet, we sometimes allow these past costs to control our future decisions. We keep spending more because we want to justify what we have already spent. This can lead to even greater losses. Understanding the sunk cost fallacy helps us make wiser and more practical decisions. What Is the Sunk Cost Fallacy? The sunk cost fallacy is a cognitive bias that makes people continue with something because of their previous investment. The investment may be money, time, energy, or emotional effort. The important point is that the earlier investment is already gone. It cannot be recovered, whether we continue or stop. The Ca...
