Sunk Cost Effect

Bias Summary: Continue investing because past resources were spent.

Irrecoverable costs irrationally influence future commitments, prolonging failing projects. Research context: Cognitive-psychology research treats biases as predictable shortcuts that can be useful under time pressure but can also systematically distort judgment. The distortion grows when evidence is ambiguous, emotionally charged, or aligned with prior beliefs. Pattern-specific focus: Continue investing because past resources were spent. Practical review method: separate factual claims from interpretation, check source quality, and test whether the conclusion survives alternative explanations.

example of sunk cost effect
permitirnos mudarnos y dejarla”, dijo Kay. “Tenemos mucho dinero invertido aquí”. Pagan $450 al mes de renta
Analysis explanation

Justifies staying due to past investment in the property.

How to recognize sunk cost effect yourself

  • One-sided evidence selection while conflicting evidence is minimized.
  • Probability judgments based on vivid anecdotes instead of base-rate data.
  • Confidence level that is higher than the quality of available evidence.
  • Identity, loyalty, or prior commitment treated as evidence.

Verification questions

  • What disconfirming evidence would change this conclusion, and is it shown?
  • Are estimates grounded in representative data or in memorable examples?
  • Would the same reasoning be accepted if group identity or prior beliefs were reversed?

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High offenders

Authors

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Publications

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