We keep going because of what we’ve already invested — money, time, effort — when a rational choice depends only on future costs and benefits. The past is gone either way.
The sunk-cost fallacy: we keep investing in something because of what we’ve already put in, when only future costs and benefits should count.
You’re an hour into a film you’re not enjoying. The rational question is “Do I want the next hour of this, or something better?” But most people stay — because they already “paid” the first hour. The same logic traps us in dead-end projects, doomed renovations, and relationships long past their end.
Economist Richard Thaler showed how this sunk-cost thinking violates rational choice. Money and time already spent are gone whatever you do next; they shouldn’t tip a forward-looking decision. Yet they tug at us, because walking away feels like admitting the past investment was wasted — so we throw good resources after bad to avoid that feeling.
When deciding whether to continue, ignore what you’ve already put in and ask only: “Knowing what I know now, would I start this today?” If the answer is no, the past spending is not a reason to keep going — it’s a cost already gone. Decide from here, not from there.
It frees you from being held hostage by the past — and from pouring more good money, time, and effort after bad.
Misread as “never quit” versus “always quit.” The fallacy is letting already-spent, unrecoverable cost drive a forward decision. The correct question ignores what’s gone and asks only: from here, is continuing the best use of my time and money? Sometimes yes — but never because of what you’ve already poured in.
Try to answer in your head first — that effort is what builds the memory.
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