Case file
Sunk Cost Fallacy
- Filed under
- Need To Act Fast
- Also recorded as
- Concorde fallacy
The charge
We continue a failing course of action because we have already invested time, money, or effort in it.
How it operates
Stopping makes past losses feel real, so persistence becomes a way to avoid that pain.
Logged incidents
- Incident 01
A team keeps funding a feature with no adoption because six months were already spent.
- Incident 02
A company renews a vendor because switching would 'waste' implementation costs.
- Incident 03
An investor holds a thesis solely to get back to breakeven.
What to watch for
You may be in it when past spend is a main reason to continue. Ask: 'If I had not already paid for this, would I start it today?'
Recommended action
Use prospective framing and explicit kill criteria at stage gates.
Known associates
- Escalation of CommitmentWe intensify commitment to a bad decision after negative feedback instead of cutting losses.
- Generation EffectWe remember and often value ideas more when we generate them ourselves rather than simply receive them.
- Loss AversionLosses usually hurt more than equivalent gains feel good, so we work harder to avoid losses than to pursue…
- IKEA EffectWe overvalue things we partly built ourselves.
- Unit BiasWe assume the provided unit, package size, or chunk is the right amount to consume, buy, or complete.
- Zero-Risk BiasWe prefer eliminating a small risk completely over achieving a larger total reduction in risk.
Source of record