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.

Sunk-cost fallacy

Also known as the Concorde fallacy · Decision-making

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.

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.

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.

Confirmation bias Anchoring bias Opportunity cost Margin of safety

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.