Have you continued with a project long after you should have abandoned it? Persevered with a relationship even after the point of no return? Dragged yourself to an event in miserable weather just because you already bought the ticket with your hard-earned cash? These are all examples of the “sunk cost effect,” which occurs when someone chooses to do or continue something just because they have invested (unrecoverable) resources in it in the past.
How Susceptible Are You to the Sunk Cost Fallacy?
Being smart won’t stop you from sinking more resources into a lost cause — but self-awareness might.
July 15, 2021
Cactus Creative Studio/Stocksy
Summary.
Many managers are susceptible to the famous sunk cost effect, whereby they persist investing in a money-losing project even when it makes sense to invest the new money in alternative new projects. The research-based tool presented in this article enables managers to measure that susceptibility.