The Sunk Cost Fallacy Explained: Why We Throw Good Time After Bad

About this psychology article

You finish the bad meal because you paid for it. You sit through the bad movie because you bought the ticket. Mice do a version of this too. Here's the actual research behind why quitting feels so...

A family buys sixty-dollar tickets to a game an hour's drive away. A snowstorm hits that afternoon. They go anyway — and later admit that if someone had simply handed them the tickets for free, they'd have stayed home without a second thought.

Same tickets. Same storm. Same drive. The only thing that changed was whether the money was already spent. That's the whole fallacy in one story.

What Is the Sunk Cost Fallacy?

The sunk cost fallacy is the tendency to keep investing time, money, or effort into something specifically because of what you've already invested — rather than based on what continuing is actually likely to get you. Economists sometimes call it the Concorde fallacy , after the supersonic jet whose development continued for years past the point everyone involved knew it would never turn a profit, purely because so much had already gone into it.

Rational decision theory has a simple rule for this: a sunk cost is gone no matter what you choose next, so it should have zero weight in deciding what to do now. Almost nobody actually decides that way.

The Study That Proved It

Psychologists Hal Arkes and Catherine Blumer ran the classic demonstration in 1985, using Ohio University's theater program. They gave the first sixty people in line for season tickets one of three prices for identical seats to identical plays — full price, a small discount, or a large discount. Over the following season, the people who'd paid full price showed up to significantly more performances than the people who'd gotten a deal. Same plays. Same theater. The only real difference was how much money each group stood to feel wasted if they skipped a night.

In a second experiment, Arkes and Blumer gave people a scenario: you've already paid $50 for a ski trip you expect to enjoy, and separately paid $100, non-refundable, for a different trip you now realize you'll enjoy less . You can only go on one. Most people picked the $100 trip — the one they knew they'd like less — because walking away from it felt like the bigger loss.

It's Not Just Us

Here's the part that tends to surprise people. A 2018 study published in the journal Science , led by researcher Brian Sweis, found that mice and rats show a strikingly similar pattern to humans when foraging for food rewards — the longer they'd already waited for a reward to arrive, the more likely they were to keep waiting, even past the point where waiting no longer made sense economically. Three very different brains, same basic miscalculation.

That doesn't mean a mouse is doing complicated economic reasoning. It suggests the opposite: whatever's driving this might be wired in at a pretty basic level, not something that requires human-level overthinking to produce.

Why This Happens

The "don't be wasteful" rule. Arkes and Blumer's own explanation was refreshingly simple — most of us were raised on some version of "finish your plate" and "don't let it go to waste." Walking away from a sunk cost can trigger that exact childhood rule, even when the situation calling it up is a relationship or a career, not a plate of food.

Avoiding the admission that you were wrong. Quitting something you've invested in can feel like admitting the original decision was a mistake. Continuing lets you postpone that conclusion — sometimes indefinitely — even while the actual cost of continuing keeps climbing.

Loss aversion. Behavioral economist Richard Thaler connected this to Kahneman and Tversky's prospect theory: people feel a loss more intensely than an equivalent gain. Walking away from a sunk cost means locking in a loss as certain . Continuing keeps the outcome uncertain — even when the odds of it working out are genuinely bad — and uncertain feels better than certain, when the certainty is bad news.

Rational Decision-Making vs. Sunk Cost Reasoning

What Rational Choice Says

What Sunk Cost Reasoning Actually Does

Only future costs and benefits matter

Past investment gets weighed as if it were still recoverable

Free tickets and paid tickets should be treated the same

Paid tickets get used more, simply because they weren't free

Quitting is just a normal update on new information

Quitting feels like confirming the original choice was a mistake

A bad outcome should be accepted once it's certain

People take on more risk specifically to avoid locking in a known loss

Where This Actually Shows Up

Relationships. "I've put five years into this." That's sunk cost reasoning applied to a person — and it runs on close to the same intermittent-reward wiring behind trauma bonding , where the time and effort already spent becomes its own reason to keep going, separate from whether the relationship is actually working.

Careers. Staying in a job or a degree program that's clearly wrong for you because of how many years you've already put toward it — even when every year that follows is a year you won't get back either way.

Money and investing. Holding a falling stock specifically because you bought in higher, rather than asking what you'd do with that same money today, with no history attached to it at all.

Everyday decisions. Finishing a bad meal, a bad book, a bad movie — situations where the money's identically gone whether you finish or not, and finishing adds nothing except more of your evening.

How to Actually Counteract It

Ask the zero-based question. "If I were deciding this for the first time today, with no history, would I choose this?" If the honest answer is no, the history isn't actually a reason to say yes.

Separate past-you from present-you. The person who made the original investment isn't obligated to be right forever. Letting present-you make an independent call, rather than defending a decision past-you already made, takes real pressure off.

Set your exit criteria before you're inside the decision. Deciding in advance — "I'll give this six months," "I'll sell if it drops another 15%" — removes the in-the-moment pull to keep moving the goalposts once real money or time is already on the line.

Notice when the fear is about looking wasteful, not about the actual outcome. If the discomfort is really about how quitting will look — to others, or to your own self-image — that's the childhood "don't waste it" rule talking, not a genuine read on what continuing will get you.

Understand Your Own Decision-Making Patterns

Whether you tend to hold on too long, or bail too early, usually isn't random — it's a pattern with its own logic. The Decision-Making Style Test on PsychOS looks at how you actually weigh evidence, risk, and pressure under real decisions, not just how you think you'd behave in theory.

→ Take the Decision-Making Style Test

Takes about 5 minutes. No account required.

Frequently Asked Questions

What is the sunk cost fallacy in simple terms?

It's the tendency to keep investing time, money, or effort into something because of what's already been spent, rather than what continuing is actually likely to produce. Since a sunk cost is gone regardless of what you decide next, rational decision-making says it should have no weight in the decision — but almost everyone factors it in anyway.

What is the classic study behind the sunk cost fallacy?

Psychologists Hal Arkes and Catherine Blumer's 1985 research is the foundational demonstration. In one experiment, theater patrons who paid full price for season tickets attended significantly more shows than those who received a discount, despite identical seats and performances. In another, most people chose a non-refundable trip they expected to enjoy less over a cheaper one they'd enjoy more, simply because more money was already committed to the first option.

Do animals experience the sunk cost fallacy?

Research published in Science in 2018 found that mice and rats showed a similar pattern to humans in a foraging task — the longer they'd already waited for a reward, the more likely they were to keep waiting, even when it no longer made economic sense. This suggests the underlying mechanism may be more basic and less uniquely human than commonly assumed.

Why do people stay in bad relationships because of sunk cost?

Time, effort, and emotional investment in a relationship can create the same "don't let it go to waste" pressure seen in financial sunk costs. Walking away can feel like admitting the years already spent were wasted, which makes staying feel safer in the moment — even when the relationship itself isn't working.

How do you actually stop falling for the sunk cost fallacy?

Approaches with real support include asking whether you'd choose the same thing today with no history attached, deliberately separating your past decision from your present one, and setting exit criteria in advance, before emotional or financial investment makes an objective decision harder to reach.