Sunk Cost Fallacy
Continuing a failing project because of resources already invested.
What & why
It works because people feel losses more sharply than equivalent gains, so abandoning a project means facing the past spend as a painful, definite loss. Continuing lets you avoid admitting the investment was wasted and protects your sense of being consistent and competent. Public commitments raise the stakes by adding the fear of looking foolish in front of others. The mind treats irrecoverable costs as if they still count, which makes throwing good resources after bad feel like loyalty rather than error.
Before & after
“We've invested two years in this platform, so we must continue despite better alternatives emerging.”
“The two years invested taught us valuable lessons. Based on current data, pivoting now will save resources and achieve better outcomes.”
When you’ll use it
Project management: 'We've already spent $2M, we can't stop now' despite clear failure indicators
Feature development: 'We've worked on this for 6 months' when user research shows no demand
Strategic initiatives: 'We've committed to this publicly' when market conditions have changed
Pro tip
Ask: 'If we were starting fresh today, would we choose this path?' Ignore past costs.
Questions & answers
What is sunk cost fallacy in business decision-making?
How can I avoid sunk cost fallacy in business presentations?
How do I help others recognize sunk cost fallacy?
Learn more
Practice this concept
Practice spotting fallacies
Practice fielding tough questions without falling into common reasoning traps. Get AI feedback on your responses.