Add a real-world policy or business example Cross-link this explicitly to Burden of Proof and Appeal to Tradition
Here’s the expanded Sunk Cost Fallacy post, with a real-world policy/business example added and explicit cross-links to Burden of Proof and Appeal to Tradition, written to drop straight into your existing page.
Sunk Cost Fallacy
(Why past investment keeps dragging bad decisions into the future)
The sunk cost fallacy occurs when past investments of time, money, or effort are used to justify continuing a decision that no longer makes sense. Instead of asking what will produce the best outcome from this point forward, the argument looks backward and treats irreversible costs as if they were reasons to persist.
They are not.
What the Sunk Cost Fallacy Is
A sunk cost is a cost that cannot be recovered. Once it has been paid, it should have no influence on future decisions.
The sunk cost fallacy happens when someone reasons:
“I’ve already put too much into this to stop now.”
The mistake is treating past loss as a reason for future commitment, rather than evaluating whether continuing actually improves the situation.
A Simple Example
I’ve already watched five episodes of this show, so I might as well finish it — even though I’m not enjoying it.
The time is already gone. Continuing does not recover it. The only relevant question is whether the next episode is worth watching now.
A Real-World Policy and Business Example
Large projects often continue long after evidence suggests they should be revised or abandoned.
In public policy, this appears when governments defend failing programs by pointing to the money already spent on them. The argument is often framed as responsibility:
“We’ve invested too much to walk away now.”
But the money is already gone. Continuing only makes sense if future benefits outweigh future costs — not because stopping feels wasteful.
In business, the same reasoning shows up in products that miss their market but continue to receive funding because of prior development costs. Teams argue for continuation to “protect the investment,” even when projections show diminishing returns.
In both cases, the past is used to justify the future — a move that feels practical but is logically irrelevant.
Why the Reasoning Fails
Past costs are irrelevant to future outcomes.
Good reasoning asks:
- What options are available now?
- What are the expected consequences from this point forward?
- Which choice leads to the best future outcome?
When sunk costs are allowed into the calculation, they anchor decisions to losses that cannot be changed.
How This Fallacy Persuades
The sunk cost fallacy is powerful because it exploits:
- Loss aversion
- Emotional attachment
- Fear of admitting error
- The discomfort of acknowledging wasted effort
Continuing a failing course of action offers the illusion that the past investment will eventually be justified. Stopping feels like making the loss official.
How It Connects to Other Fallacies
The sunk cost fallacy rarely appears alone.
- Burden of Proof
Past investment is often treated as a reason not to justify continued action. Instead of asking whether continuation is warranted, critics are challenged to prove that stopping is acceptable.
→ See also: Burden of Proof - Appeal to Tradition
Long-standing commitments are defended by their duration: “We’ve always done it this way” or “This has been going on for years.” Time spent becomes mistaken for evidence of correctness.
→ See also: Appeal to Tradition
Together, these fallacies reinforce persistence by shifting attention away from present-day justification.
How to Avoid the Sunk Cost Fallacy
A useful reframing:
If I were deciding today, with no prior investment, would I choose this option?
If the answer is no, sunk costs should not change it.
Other helpful questions:
- What future benefit am I expecting that justifies continuing?
- Am I defending the decision, or evaluating it?
- Would I recommend this course of action to someone starting fresh?
A Skeptical Reminder
Changing your mind in response to evidence is not weakness.
Continuing solely to avoid admitting error is.
Sunk costs are facts about the past.
Decisions should be about the future.
In One Sentence
The sunk cost fallacy occurs when past investments are treated as reasons to continue, even when they no longer improve future outcomes.