# Sunk Cost Fallacy

> The cognitive bias of continuing to invest in a losing endeavor because of the resources already committed, even when the rational forward-looking analysis says to stop.

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## Definition

The cognitive bias of continuing to invest in a losing endeavor because of the resources already committed, even when the rational forward-looking analysis says to stop. The fallacy stems from loss aversion combined with the psychological difficulty of admitting a prior decision was wrong. Sunk costs are by definition unrecoverable and therefore irrelevant to future decisions — only future costs and future benefits matter. The clearest organizational defense is a pre-committed kill criterion: define in advance what evidence would justify abandoning the project, and review it on schedule.


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