Sunk-cost fallacy
The sunk-cost fallacy is continuing a course of action because of resources already invested — time, money, or effort — even when quitting would be the better choice. Past costs that can’t be recovered should never drive future decisions, yet they do.
✦ Foundational — cross-referenced 23× across this reference (7 related ideas · 3 comparisons · 11 hubs · 1 book) · The State of Thinking 2026 →
Why it happens
Loss aversion makes “wasting” a prior investment feel like a fresh loss, and a desire for consistency makes quitting feel like admitting a mistake. The mind treats unrecoverable past costs as if they were still at stake in the present.
We escalate not to protect the investment but the story that we weren't wrong to make it.
Examples
- Sitting through a bad film to the end because you paid for the ticket.
- Staying in a failing project or relationship “after all this time invested.”
- Governments funding doomed megaprojects rather than absorb the loss — the original Concorde case.
How to counter it
- Ask: “Knowing what I know now, would I start this today?” If no, stop.
- Treat unrecoverable costs as gone — they are irrelevant to the next decision.
- Set kill-criteria before you begin, so quitting is a plan, not a defeat.
The deeper point
It isn’t really about the money — it’s about identity. We don’t escalate to protect the investment; we escalate to protect the story that we weren’t wrong to make it. Quitting feels like admitting, not just losing.
Frequently asked
- What is the sunk-cost fallacy in simple terms?
- Throwing good money (or time) after bad because you’ve already spent so much — letting unrecoverable past costs dictate future choices instead of expected future value.
- Why is it hard to ignore sunk costs?
- Quitting feels like wasting the investment and admitting you were wrong. Loss aversion makes that emotional cost loom larger than the rational case for stopping.
- How do you avoid the sunk-cost fallacy?
- Judge decisions only by future costs and benefits, ask whether you’d start fresh today, and set clear stop conditions in advance.
Related
Keep reading
Loss aversion
Most people turn down a coin flip that pays £150 against a £100 loss — the math loses to the sting.
See this alongside the other thinking tools of investing, building a startup, negotiation, product management, career growth, software engineers and productivity.
This bias distorts negotiation, investing, planning & estimation and product decisions.
Go deeper
The book behind this idea: Thinking, Fast and Slow by Daniel Kahneman. Hear the whole thing free — start an Audible trial and your first audiobook is on the house.
Read the full summary of Thinking, Fast and Slow →
More canonical picks:
- The Art of Thinking Clearly — Rolf Dobelli
- The Great Mental Models, Volume 1 — Shane Parrish
- Poor Charlie’s Almanack — Charlie Munger
- Super Thinking — Gabriel Weinberg & Lauren McCann
- Seeking Wisdom — Peter Bevelin
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Cite this page
ReadGlobe. (2026). Sunk-cost fallacy. https://readglobe.com/bias/sunk-cost-fallacy/
"Sunk-cost fallacy." ReadGlobe, 29 May 2026, readglobe.com/bias/sunk-cost-fallacy/.
Primary source: Wikipedia
Editorial synthesis © ReadGlobe 2026, drawing on Kahneman’s Thinking, Fast and Slow, the Tversky–Kahneman research program, and the primary cognitive-science literature. · Last reviewed 2026-05-29.