Sunk Cost Fallacy
Also known as: sunk cost effect, escalation of commitment, Concorde fallacy
Sticking with a failing course of action because of what you've already put into it — money, years, effort — even though nothing you do next can recover what's spent.
Examples
An hour into a film both of them are hating:
Ana: “Want to leave?” Ben: “We paid for the tickets — we’re finishing it.”
The money is gone either way. The only live question is whether the next hour goes to something better, and Ben just spent it on a movie he hates to honor a payment he can’t undo.
The expensive version happens in meetings:
Director: “We’ve sunk two years and half the budget into this system. Walking away now would mean it was all for nothing.”
But if the system won’t work, it already is for nothing — the two years are spent whether the project continues or not. Continuing spends more.
The same pull works on arguments: three hours into an online thread, admitting doubt feels like wasting the three hours. So people escalate instead.
Why it happens
Abandoning a course of action forces you to book the loss: the money, time, or effort becomes officially wasted, and quitting feels like causing that waste rather than acknowledging it. Persisting keeps the story open — “it can still pay off” — which is more comfortable than closing the account at a loss. The effect shows up in experiments with real stakes, in field studies, and in decades of escalation-of-commitment research on organizations.
One honest caveat: not every look backward is a fallacy. Past investment can carry real information (“we’ve verified half of it works”) or reputational weight. The error is counting the unrecoverable spend itself as a reason to continue.
How to counter it
- Ask the fresh-start question: “Knowing what I know now, would I start this today?” If no, the sunk costs are the only thing keeping you in.
- Separate the two decisions: what’s spent (history) and what to do next (choice). Only the second is yours to make.
- Reframe quitting as saving, not wasting: leaving the movie rescues an hour; it doesn’t waste a ticket.
- Be kind about it in others — “I get not wanting the two years to feel wasted; either way they’re spent. What’s the best use of the next six months?”