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Category

Cognitive Biases

Impact level

3 / 5

Category Cognitive Biases

Impact 3 / 5

COGNITIVE BIASES

Sunk Cost
Fallacy

The phenomenon whereby a person is reluctant to abandon a strategy or course of action because they have invested heavily in it, even when it is clear that abandonment would be more beneficial.

Also known as: Sunk Cost Effect

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Cognitive processing

System 1 (fast, intuitive). Biases often lean on quick judgments (System 1) unless you slow down and analyze (System 2).

Evidence & time

Evidence strength: experimental. Typical read: about 4 min.

Catch it next time

Practical steps for Sunk Cost Fallacy

1
Ignore past costs and focus on future utility
high effectivenesshard difficulty

Tape this to your desk.

02

Common triggers

→

Failing projects

→

Bad investments

03

Typical contexts

→

Business projects

→

Relationships

→

Gambling

04

Mitigation strategies

Ignore past costs and focus on future utility

Effectiveness: high

Difficulty: hard

05

Potential decision harms

Wasted resources

major Severity

Prolonged failure

major Severity