Psychological
Sunk Cost Fallacy
What it is
Encouraging continued investment by emphasizing what has already been spent.
How it works
Real-world examples
- •"You've already put in six months, don't quit now" at a bad job.
- •Continuing to watch a terrible movie because you paid for the ticket.
- •Staying in a failing business partnership because of the initial capital invested.
Ethical guidelines
- ●Help people make forward-looking decisions, not backward-looking ones.
- ●Do not guilt people into continuing based solely on past investment.
- ●Frame choices in terms of future value, not sunk costs.
How to defend against it
- ►Ask: "If I were starting fresh today, would I make this choice?"
- ►Accept that past costs are gone regardless of your next decision.
- ►Focus on future costs and benefits, not what has already been spent.