The sunk cost fallacy refers to a thinking mistake people sometimes make when they consider past investments (such as time, money, or effort) in a decision-making process. It happens when someone continues investing in something, even though it no longer makes sense or brings benefits, simply because they have already invested so much.
The key idea is that the costs or investments that have already been made are “sunk” because they cannot be recovered. However, people often let their emotions or attachment to those past investments influence their decision, rather than considering the current situation or future outcomes.
In essence, the sunk cost fallacy leads people to make choices based on what they have already put in, rather than evaluating the current circumstances objectively. It can prevent them from making rational decisions because they focus too much on trying to justify or recoup what has already been spent, instead of considering what will truly benefit them moving forward.
Examples of the Sunk Cost Fallacy
Let’s say you have a friend who you’ve known for a long time, but lately, you’ve been feeling like the friendship isn’t very healthy or enjoyable anymore. You may be thinking about ending the friendship, but then you start to think about all the time and effort you’ve already invested in the friendship.
The sunk cost fallacy in relationships is when you continue to stay in a friendship or relationship that isn’t making you happy, just because you’ve already put a lot of time and effort into it. You might feel like you should keep trying to make it work because of all the memories and experiences you’ve had together.
But here’s the important thing to remember: relationships should be about happiness, respect, and support. If a friendship or relationship is no longer bringing you joy or is even causing you unhappiness or harm, it’s okay to let it go. The time and effort you’ve already put into it are like the past, and you can’t change that. Holding onto a relationship just because of the past can prevent you from finding new friendships or relationships that are healthier and more fulfilling.
It’s important to think about what will make you happy and surround yourself with people who treat you well and bring positivity to your life, rather than being stuck in a relationship just because of the time you’ve already invested.
Here’s another example, let’s say you buy a ticket to go see a movie that you were really excited about. However, when you arrive at the theater and start watching the movie, you realize that it’s not as good as you expected. You find it boring and unenjoyable.
Despite not liking the movie, you decide to stay until the end and watch it anyway. Why? Because you think that since you already paid for the ticket, you should get your money’s worth. You believe that leaving the theater would mean wasting the money you spent on the ticket.
However, the money you spent on the ticket is already gone, whether you watch the movie or not. It’s a “sunk cost” because you can’t get it back. By staying and watching the movie, you are sacrificing your time and possibly enduring something you don’t enjoy, just to try and make the initial investment feel worthwhile.
In this situation, a better approach would be to recognize that the movie isn’t enjoyable for you and that your time is valuable. It’s okay to leave the theater and do something else that you would actually enjoy, even if it means “losing” the money you spent on the ticket. It’s important to prioritize your current happiness and well-being over trying to justify a past investment that can’t be changed.