The Sunk Cost Fallacy: Why Spent Money Keeps You Going
You booked the film. The seats are empty. Should you give it one more night? Run a cinema owner's three decisions, test your own reasons, and learn when persistence helps and when past spending quietly steers the choice. Five short chapters, eight quick checks, about twelve minutes.
BySeph Fontane Pennock
Reviewed byMichael Callans, MSW
What is the sunk cost fallacy?
The sunk cost fallacy is the tendency to keep investing in something because of money, time, or effort already spent, even when the future tradeoff favors another option. A sunk cost cannot be recovered by either choice. The loss is real, but continuing does not undo it. What matters for the next decision is what can still change.
Sunk Cost Fallacy Examples
- A cinema: screening an unpopular film only to justify its nonrefundable booking fee, even though each extra screening loses more money.
- A hobby: spending another weekend on a kit you no longer enjoy only because you spent weeks assembling it.
- A subscription: using an unhelpful service only because last month's payment cannot be refunded. A refund still available today, however, belongs in the current comparison.
The key study
In Arkes and Blumer's 1985 theater study, season-ticket buyers were assigned normal prices or discounts, and those paying full price used more tickets during the first half of the season. The groups did not differ significantly in the second half, so this was a context-dependent finding, not a rule about every person.
Now take the owner's seat. Make three hypothetical cinema decisions, examine your reasons, and practice comparing what happens next.
0 / 100 insight points0 / 5 stamps
20 points for recording all three decisions and their reasons, plus 10 per completed check. Retries earn full points. First-attempt accuracy is separate.
Progress stays in this browser.
Sunk cost fallacy: common questions
What is the sunk cost fallacy?
The sunk cost fallacy means letting an unrecoverable past investment drive a current choice. Money, time, and effort can all be sunk costs. The useful comparison is what each available option offers from now on.
What is a sunk cost fallacy example?
Imagine paying for a nonrefundable workshop, then discovering that its remaining sessions do not meet your needs. Attending only because you already paid is sunk-cost reasoning. Attending because the remaining sessions are useful can be a sound choice.
Is sunk cost bias the same as persistence?
No. Persistence can serve a worthwhile future goal. Sunk cost bias is about the reason for continuing: trying to justify something already spent, even when another option has better prospects.
How can the sunk cost fallacy appear in relationships?
The thought that years together must be justified by more years can resemble sunk-cost reasoning. Shared history can also shape present trust, care, responsibilities, and future hopes. The concept alone cannot tell someone whether to stay or leave.
How can I avoid the sunk cost fallacy?
Separate what cannot be recovered from what your choice can still change. Compare future benefits, costs, and alternatives, including the costs of stopping. Write down what new evidence would make you reconsider. This is a reflection strategy, not a guarantee against bias.
Sources
- Arkes and Blumer (1985), The psychology of sunk cost
- Thaler (1980), Toward a positive theory of consumer choice
- Sweis et al. (2018), Sensitivity to sunk costs in mice, rats, and humans
Cite this source
Psychology.com. (2026, September 16). The Sunk Cost Fallacy. Psychology.com. https://psychology.com/courses/sunk-cost-fallacy
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