This is a Lexicon entry: the mechanism, when it shows up, and the countermeasure. The full correction, with real-world cases and the audit prompt, hasn't been written yet.
Definition
The tendency to continue an endeavor once an investment in money, effort or time has been made, even if the current costs outweigh the benefits.
When it shows up
Any decision to continue an existing commitment with non-recoverable past costs: a movie you already paid to see, a relationship with years invested, a project with months of work behind it. Modern context: A startup that has spent three years building a feature its users don't engage with continues development because the technical investment is visible to investors - exiting the feature feels like admitting the investment was wasted, even though continuation consumes the same resource at increasing cost. High-stakes instance: Defence procurement and large infrastructure - governments have continued funding projects with cost overruns of 300-500% beyond original budget primarily because the prior investment made stopping feel more costly than continuing. Failure mode: Past non-recoverable costs enter the continuation decision even though they cannot be changed by any future action. The sense that 'I have too much invested to stop' is the exact condition under which a bad plan continues past the point of rational exit. Estimated cost: High - often irreversible where this bias dominates unchecked decisions.
Failure mode
Past non-recoverable costs enter the continuation decision even though they cannot be changed by any future action. The sense that 'I have too much invested to stop' is the exact condition under which a bad plan continues past the point of rational exit.
Countermeasure
Ask: 'If I were not already in this, would I start it now from scratch?' The sunk cost is gone either way. Only the future matters.
Related traps
Also connected in the map15 more, locked
Credit & first seen
DiscoveredFormalised in behavioural economics by Arkes and Blumer (1985); related to commitment bias and prospect theory. source ↗
Also revealed
Entry #110 of 631 in The Lexicon · see the full Lexicon