The sunk cost fallacy is letting money, time, or effort you cannot get back push you to keep going. A sound decision ordinarily compares the future: what each option is likely to cost, what it may deliver, and what you would give up by choosing it. Past investment is not automatically a reason to continue—but it can sometimes provide information or matter because of real constraints.
What is the sunk cost fallacy?
A sunk cost is a cost already incurred that cannot be recovered. The sunk cost fallacy occurs when that past investment—money, time, or effort—drives a current choice to continue, even though the choice should ordinarily be based on its future consequences. BehavioralEconomics.com attributes a frequently used definition to Arkes and Blumer (1985): continuing a behavior or endeavor because resources have already been invested (BehavioralEconomics.com’s reference entry). The University of Chicago describes a related pattern as continuing to invest in a losing project because of the amount already invested (University of Chicago News).
In the basic decision model, money already paid is gone either way. It is not a future benefit of carrying on. The relevant question is whether the benefits of continuing from this point onward outweigh its future costs and risks, including what the best alternative could bring.
What are examples of the sunk cost fallacy?
Eating past the point of enjoyment
You paid for a meal, feel full, and keep eating to “get your money’s worth.” The price is already spent. The current choice is whether the remaining enjoyment is worth the discomfort—and whether you would prefer to stop.
#1 Best Overall
Driving through dangerous weather for a ticketed event
A ticket is already paid for, so you feel compelled to go despite hazardous conditions. The ticket cost cannot be recovered by taking the trip. The decision now is about the risk of traveling and the value of attending, compared with staying home or choosing a safer alternative.
Choosing a prepaid event over a better option
You have a ticket to a play but would rather have dinner with a friend. This is a choice about how to use something already purchased, not whether to spend more on an ongoing project. A paid ticket can distort the choice by making the play seem more valuable than it is to you now. A review of the research calls this kind of choice a utilization decision (Business Research meta-analytic review).
Funding a troubled project because of what it has already cost
An organization may commit more resources to a struggling project because it has already invested heavily. The Concorde program is often used to illustrate this reasoning: additional funding was justified by substantial prior investment despite uncertain financial success. That brief example is not a complete account of the project’s history. The current question for any organization is whether another investment is worthwhile given its likely future outcomes, not whether the past spending can be recovered.
Staying on a career path because of years already invested
Someone may remain in a career because of the time spent training or building experience, even when new information suggests the work is no longer a good fit. The NIH Office of Intramural Training & Education discusses career decisions as one setting where commitment to past decisions can outweigh new information. Its page notes that its views do not necessarily represent NIH or the federal government (NIH Office of Intramural Training & Education).
Quick wins for a faster PC:
Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →How to avoid the sunk cost fallacy
This reflection tool cannot guarantee immunity from bias. It can help you separate the irrecoverable past from the decision you actually face now.
- Name the past cost. Identify the money, time, or effort already spent. Ask whether any of it can truly be recovered. If not, do not count it as a benefit you will receive by continuing.
- Reset the choice. Ask: “If I were making this decision today, knowing what I know now, which option would I choose?”
- Compare the options from here forward. For continuing, stopping, or switching, consider expected future benefits, future costs and risks, the opportunity cost of your best alternative, and any relevant new evidence. Include practical limits such as the time or money you have available.
- Decide what could change your mind. Name the evidence that would justify continuing or stopping, and set a time to review it. This can help distinguish a decision updated with new information from one made mainly to defend an earlier choice.
- Make room for the emotional pull. Stopping can feel painful because of loss aversion or commitment to a previous choice. That feeling is worth noticing, but it does not prove that continuing is the better option.
When can past investment still matter?
“Ignore sunk costs” is a useful basic rule, not a command to disregard history. Past costs can sometimes provide information about a project, or a decision may involve reputational concerns, financial limits, or time constraints. Economists Sue H. Mialon and R. Preston McAfee argue that reacting to past costs can be rational in a broad range of situations for these reasons (“Do Sunk Costs Matter?”). A model by Sandeep Baliga and Jeffrey C. Ely treats past costs as potentially informative when decision-makers have limited memory about why a project began (“Mnemonomics: The Sunk Cost Fallacy as a Memory Kludge”).
Rank #4
- Why Do Smart People Make Irrational Decisions Every Day? The Answers Will Surprise You. This Book Is A Look At Why We All Make Illogical Decisions. Why Can A 50-cent Aspirin Do What A Penny Aspirin Can't? If An Item Is Free It Must Be A Bargain, Right? Why Is Everything Relative, Even When It Shouldn't Be? How Do Our Expectations Influence Our Actual Opinions And Decisions? In This Book, The Author, A Behavioral Economist Cuts To The Heart Of Our Strange Behaviour, Demonstrating How Irrationality Often Supplants Rational Thought And That The Reason For This Is Embedded In The Very Structure Of Our Minds. This Book Blends Everyday Experiences With A Series Of Illuminating And Often Surprising Experiments, That Will Change The Understanding Of Human Behaviour. And, By Recognizing These Patterns, The Author Shows That We Can Make Better Decisions In Business, In Matters Of Collective Welfare, And In Our Everyday Lives From Drinking Coffee To Losing Weight, Buying A Car To Choosing A Romantic Partner. How An Injury Led Me To Irrationality And To The Research Described Here -- The Truth About Relativity: Why Everything Is Relative, Even When It Shouldn't Be -- The Fallacy Of Supply And Demand: Why The Price Of Pearls And Everything Else Is Up In The Air -- The Cost Of Zero Cost: Why We Often Pay Too Much When We Pay Nothing -- The Cost Of Social Norms: Why We Are Happy To Do Things, But Not When We Are Paid To Do Them -- The Power Of A Free Cookie: How Free Can Make Us Less Selfish -- The Influence Of Arousal: Why Hot Is Much Hotter Than We Realize -- The Problem Of Procrastination And Self-control: Why We Can't Make Ourselves Do What We Want To Do -- The High Price Of Ownership: Why We Overvalue What We Have -- Keeping Doors Open: Why Options Distract Us From Our Main Objective -- The Effect Of Expectations: Why The Mind Gets What It Expects -- The Power Of Price: Why A 50 Cent Aspirin Can Do What A Penny Aspirin Can't -- The Cycle Of Distrust: Why We Don't Believe What Marketers Tell Us -- The Context Of Our Character Part I: Why We Are Dishonest, And What We Can Do About It -- The Context Of Our Character, Part Ii: Why Dealing With Cash Makes Us More Honest -- Beer And Free Lunches: What Is Behavioral Economics And Where Are The Free Lunches? Dan Ariely. Revised And Expanded Edition--t.p. Includes Bibliographical References (p. [335]-349)
- Author: Ariely, Dan.
- Publisher: Harper Perennial
- Pages: 380
- Publication Date: 2010
The practical distinction is between a past cost as a reason to “make back” money that is gone and the genuine information or consequences associated with a project’s history. Do not continue solely to justify an irrecoverable expense. Do consider evidence that changes the outlook, future obligations, and constraints that affect what options are realistically available.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What research says about the effect
A 2015 meta-analytic review in Business Research examined studies published from 1976 to 2013. It separates two questions that are sometimes grouped together:
Best Value
- Utilization decisions: choosing between alternatives, such as using a prepaid service or attending an event for which you already have a ticket.
- Progress decisions: deciding whether to put more resources into an existing project.
The review found evidence of a sunk-cost effect across both types, but it also notes that inconsistent definitions and the mixing of different decision questions limit comparisons and generalization. Within the studies it analyzed, time attenuated the effect in utilization decisions, and the observed effect was stronger among younger people or students. The review did not support the claim that greater familiarity with economic decision-making, such as economic education, effectively reduces the effect. These are findings from that review, not universal predictions about every person or decision. It does not establish a context-free prevalence figure for the fallacy.
NIH career guidance says the effect cannot be completely avoided, while recognizing its influence and making a fresh decision using new data can help. Neuroscience findings do not offer a shortcut to diagnosing your own choices: Stanford Report’s January 28, 2026 account describes a mouse study in which striatal dopamine release was influenced by reward size and also increased with the effort required to obtain the reward. That is background on effort and reward valuation, not proof that every decision to continue is irrational or an established intervention for avoiding the fallacy (Stanford Report).
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
