Sunk Cost Fallacy
Continues an endeavor because of past investment rather than future benefit.
- •Definition: Continues an endeavor because of past investment rather than future benefit.
- •Impact: Sunk Cost Fallacy distorts reasoning by Past costs are gone; only future returns matter. Clinging to sunk costs can increase losses and block pivoting.
- •Identify: Look for patterns like Note time/money already invested.
What is the Sunk Cost Fallacy?
Sunk costs are unrecoverable. Decisions should weigh future costs and benefits, but this fallacy treats past spending as a reason to persist, even when prospects are poor.
People lean on this pattern because Avoiding loss feels better than admitting waste; escalation can feel safer than writing off costs.
- 1Note time/money already invested.
- 2Use that investment as justification to continue.
- 3Ignore current evidence about expected future value.
Why the Sunk Cost Fallacy fallacy matters
This fallacy distorts reasoning by Past costs are gone; only future returns matter. Clinging to sunk costs can increase losses and block pivoting.. It often shows up in contexts like Project management, Investing, Personal commitments, where quick takes and ambiguity can hide weak arguments.
Examples of Sunk Cost Fallacy in Everyday Life
Organizations keep funding failing projects because of prior expenditures and political capital, compounding losses.
Why it is fallacious
Past costs are gone; only future returns matter. Clinging to sunk costs can increase losses and block pivoting.
Why people use it
Avoiding loss feels better than admitting waste; escalation can feel safer than writing off costs.
Recognition
- Justifications cite past investment, not future prospects.
- Hesitation to pivot despite negative forecasts.
- Emotional attachment to prior effort outweighs fresh evidence.
Response
- Reframe decisions around expected future value.
- Acknowledge sunk costs and separate them from go/no-go choices.
- Set predefined exit criteria to prevent escalation.
- “Sunk Cost Fallacy” style claim: Continues an endeavor because of past investment rather than future benefit.
- Watch for phrasing that skips evidence, e.g. "Continues an endeavor because of past investment rather than future benefit"
- Pattern hint: Note time/money already invested.
Reframe decisions around expected future value.
Sunk Cost Fallacy is often mistaken for Planning Fallacy, but the patterns differ. Compare the steps above to see why this fallacy misleads in its own way.
Close variations that are easy to confuse with Sunk Cost Fallacy.
Frequently Asked Questions
Sunk Cost Fallacy signals a weak reasoning pattern. Even if the conclusion is true, the path to it is unreliable and should be rebuilt with sound support.
Sunk Cost Fallacy follows the pattern listed here, while Planning Fallacy fails in a different way. Looking at the pattern helps choose the right diagnosis.
You will find it in everyday debates, opinion columns, marketing claims, and quick social posts—anywhere speed or emotion encourages shortcuts.
It can feel persuasive, but it remains logically weak. A careful version should replace the fallacious step with evidence or valid structure.