Decision Making

Sunk Cost Bias

Past investment distorts present choice

Past investment—time, money, emotion, identity—distorts present judgment. 'We've already put too much in' becomes the rationale for continuation. Exit feels like waste, staying feels justified.

Mechanism

The mind treats past costs as relevant to future decisions, even when they're irrecoverable. Emotional attachment to prior investment overrides rational assessment of future value.

Early Signals

—'We've come too far to stop now'

—Escalating commitment despite deteriorating conditions

—Exit framed as 'giving up' or 'wasting' prior effort

—Justification based on past investment rather than future potential

—Emotional urgency to 'make it work'

Typical Outcomes

—Overcommitment to failing projects

—Rationalization after losses

—Staying long after conditions change

—Throwing good money after bad

Powers These Traps

Primary Driver

Commitment Escalation

psychological trap

Examples in Practice

Business

Failed acquisition integration

Company continues pouring resources into integrating a troubled acquisition because 'we paid $500M for it' rather than cutting losses.

Personal

Career persistence

Professional stays in unfulfilling career because 'I spent 10 years getting here' rather than evaluating future opportunity cost.

Government

Infrastructure project

Public project continues despite cost overruns and changed conditions because 'we've already invested $2B' becomes political justification.

Why This Bias Persists

Admitting error feels more painful than enduring loss. Exit requires acknowledging that past investment was wasted—a psychologically costly admission.