The Sunk Cost Fallacy: How to Avoid Falling for This Common Error
We’ve all been in situations where it seemed easier to continue with something that wasn’t working than to simply quit. It could be a project that never gets off the ground, a relationship that has lost its spark, or even a course that no longer interests us. This behavior has a name: sunk cost fallacy, also known as the sunk cost trap.
In this post, we’ll explore what this fallacy is, why it’s so common, and how you can avoid it to make better decisions.
What is the Sunk Cost Fallacy?
The sunk cost fallacy occurs when we make decisions based on what we’ve already invested — time, money, effort or any other resource —, even when that investment is irrecoverable. This leads us to continue something that, rationally, no longer makes sense.
In other words, it’s the idea that “I’ve invested so much in this that I can’t quit now”. But what we forget is that the money, time or effort already spent cannot be recovered, and the decision should be based only on what’s best from this point forward.
Why Are We Prone to Fall for This Fallacy?
The sunk cost fallacy is more emotional than rational. Some of the factors that contribute to this behavior include:
• Emotional attachment: We tend to attach ourselves to what we’ve already built, even when it’s not working.
• Loss aversion: We prefer to avoid the feeling of “losing” something we’ve already invested.
• Social pressure: The fear of appearing failed or a quitter can lead us to continue with bad choices.
• Hope: Believing that “things can get better” often keeps us trapped in harmful situations.
Examples of the Fallacy in Daily Life
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Business: Imagine you opened a coffee shop and invested a lot of money in decoration and equipment, but the location doesn’t attract customers. Instead of closing and cutting losses, you continue injecting money, believing that “eventually” the business will recover.
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Relationships: Staying in an unhappy relationship because you’ve been together for years and have already “invested so much time” in each other.
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Studies or Careers: Persisting in a college or profession you don’t like because you’ve already completed half the course or have been at the company for a long time.
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Leisure: Watching a movie to the end that you’re not enjoying because you’ve already spent an hour watching it.
How to Avoid Falling for the Sunk Cost Fallacy?
Here are some practical strategies to make better decisions and avoid this error:
Reevaluate the situation objectively
Ask yourself: If I were starting from scratch today, would I still choose to continue with this? If the answer is “no”, maybe it’s time to stop.
Accept that losses are part of life
Recognize that we all make mistakes and that it’s normal to abandon something that isn’t working.
Focus on the future, not the past
Remember that costs already invested cannot be recovered. Focus on the future costs and benefits of your decision.
Consider the 10-10-10 rule
Ask yourself: How will I feel in 10 days, 10 months and 10 years if I continue with this choice?
Talk to other people
Sometimes we’re so emotionally involved that we can’t think clearly. An external opinion can help.
Conclusion
The sunk cost fallacy is a common thinking error that can trap us in harmful situations. But you don’t need to keep throwing resources at something that isn’t working. Learning to abandon what no longer brings value is an essential skill for success, both personally and professionally.
Next time you feel “stuck” with something, ask yourself: Am I making this decision because it makes sense now, or because I don’t want to give up what I’ve already invested? The answer can change your perspective and help you make smarter decisions.
And remember: quitting is not a sign of weakness — it’s a sign of wisdom.
What did you think of this concept? Have you faced situations where you fell for the sunk cost fallacy? Share your experience in the comments!