Sunk Cost Fallacy

Sunk Cost Fallacy refers to the cognitive bias where individuals continue an endeavor or continue consuming resources based on previously invested resources (time, Money, effort), rather than on a rational assessment of future benefits and costs.

For example, if someone has spent a significant amount of Money repairing an old car, they may decide to spend even more on additional repairs, believing they cannot abandon it without recovering their initial investment, even if the car’s future reLiability is questionable.

In another case, a company may continue funding a failing project because of the substantial Money already invested, ignoring the likelihood that future investments will not yield positive Returns.