Logical Fallacies
Sunk Cost Fallacy

Continuing a failing project because of resources already invested.

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What it is

A logical fallacy where past investments of time, money, or effort are used to justify continuing a course of action, even when future costs outweigh potential benefits. The error lies in considering irrecoverable past costs in future decision-making.

Before & after

Before

“We've invested two years in this platform, so we must continue despite better alternatives emerging.”

After

“The two years invested taught us valuable lessons. Based on current data, pivoting now will save resources and achieve better outcomes.”

When you’ll use it

Project management: 'We've already spent $2M, we can't stop now' despite clear failure indicators

Feature development: 'We've worked on this for 6 months' when user research shows no demand

Strategic initiatives: 'We've committed to this publicly' when market conditions have changed

Pro tip

Ask: 'If we were starting fresh today, would we choose this path?' Ignore past costs.

Questions & answers

3 questions

What is sunk cost fallacy in business decision-making?

Sunk cost fallacy continues investing in failing projects because of previous investments rather ...

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How can I avoid sunk cost fallacy in business presentations?

Focus on future potential rather than past investments, evaluate projects based on going-forward ...

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How do I help others recognize sunk cost fallacy?

Reframe discussions around future potential, provide objective analysis tools, ask 'If we were st...

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Learn more

Wikipedia
Thinking, Fast and Slow by Daniel Kahneman (Goodreads)

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