sunk-cost fallacy
You've paid 50 dollars for a movie ticket, but ten minutes in the film is terrible. Do you stay? Many people grit their teeth and sit through it, reasoning 'I already paid, I can't waste it.' But the 50 dollars is gone whether you stay or leave — staying just adds two boring hours to the loss. Letting a past, unrecoverable expense keep driving a present decision is the sunk-cost fallacy.
A sunk cost is money, time, or effort already spent that cannot be recovered no matter what you do next. The logical rule is simple: ignore sunk costs and decide only on future costs and benefits from here forward. The fallacy is doing the opposite — continuing a project, relationship, or purchase because of what you've already poured in, rather than because finishing is worth it from now on. If a 9-million-dollar project needs 5 more million to finish but will only ever earn 3 million, the 9 million already spent is irrelevant; spending the extra 5 to earn 3 is a fresh, losing bet.
The sunk-cost fallacy explains why governments finish doomed projects (the Concorde supersonic jet is the classic case), why companies keep funding failing products, why people stay in bad jobs and relationships, and why gamblers chase losses. It is reinforced by loss aversion — quitting forces you to 'realize' the loss — and by not wanting to look wasteful. The honest nuance: walking away is not always right, because finishing can carry real future value (reputation, learning, near-completion). The skill is separating genuine future payoffs from the mere pull of the past.
A firm has spent 9 million dollars developing a product and needs 5 million more to launch it, but honest forecasts say it will earn only 3 million. The right call is to stop — yet many firms press on 'so the 9 million isn't wasted,' turning a 9-million loss into a 14-million one.
The money already spent is gone; only future costs and benefits should decide.
Ignoring sunk costs is the rule — but 'always quit' is wrong too. Finishing can have genuine future value; the trick is telling real future payoffs apart from the pull of the past.