Psychologycalendar_todayLast updated: Apr 2026
What is Sunk Cost Trap?
/ˈsʌŋk kɔːst træp/
The sunk cost trap is the psychological tendency to continue investing time, money, or effort into something because you've already spent resources on it, even when it's no longer the best decision. Past costs should not influence future choices, but our brains treat them as if they should.
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Everyday Example
You've watched 90 minutes of a terrible movie because you paid for the ticket—even though those two hours are gone forever and won't come back no matter what you watch now.
publicReal-World Application
“Venture capitalists must guard against this when deciding whether to keep funding a failing startup; some founders struggle to pivot or shut down because they've already invested their savings.”
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Did you know?
Economists Richard Thaler and Hersh Shefrin formalized sunk cost fallacy in behavioral economics during the 1980s, showing it contradicts rational decision-making theory.
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Key Insight
Only future consequences matter for decisions—your past investment is irrelevant and becomes an emotional anchor that blinds you to better choices.
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