The One With the Sunk Cost

We've been on the topic of fallacies lately and I owe my esteemed co-blogger SK a thank-you for educating me about them, so I thought I'd offer one. I look forward to your thoughts. (I'll also borrow SK's disclaimer that thought experiments are included in this post, and if you dislike Friends you may want to stop reading now. Are there people who dislike Friends?)

This fallacy is a favorite of mine: "sunk cost." Logically Fallacious offers a nice definition and examples, but basically I think of it as, "This [project/relationship/activity] isn't working and doesn't seem likely to get better, but I can't walk away because I've already put so much [effort/time/money] into it!"


As an example, I like to ask people whether they finish a book or movie they're not enjoying. If they tell me they stick with it to the bitter end, I'm always curious about their reasoning. Because they've already spent time on it?

I'll readily acknowledge that quitting things can easily become a habit (another thing Mom and Dad were right about). But if someone isn't enjoying or benefiting from an activity and there is little hope of doing so in future, does more time or effort make sense?

What do you do in this situation? If you ditch the thing, when do you decide it's time to walk away? If you stick with it, how much has to be invested to prevent you from walking away? These questions can be hard to quantify but it may be important to try.


Sunk cost can keep relationships going. True story, names changed: a former co-worker, Mike, had been married to Beth for almost 25 years. The early years were good, but nowadays neither spouse feels very positive about the marriage. They've tried counseling a couple times but nothing changes.

They have different spending habits and often argue about money. Beth tells Mike he should be earning more. Maybe she means well, as in, "You're wonderful and capable of so much more!" but it doesn't feel that way to him. They have different social habits (one introvert, one extrovert), and most of their time as a couple is spent watching TV now that their kids are grown and gone.

Beth left for a year, then returned and Mike decided to stick with it. "Well, I'm not happy...but I've already put twenty-five years into this."


Ending a relationship is often a very difficult decision. Will you end up lonely? In another relationship with different problems? Or might both of us be happier apart?


I am not saying we should ditch things at the first flicker of dissatisfaction or break promises lightly. I do believe in trying to minimize hurt to others and myself, though, so I am saying that inertia from sunk costs may not be the best guide to a happy or productive life, and we should periodically examine whether it plays a role in our decisions.


Want to know if you might be using sunk cost reasoning? Here are a few simple scenarios, and the first is a gimme. There's no right or wrong answer, but let us know what you would do in each one, and why. Have fun 😂

1. You bought a $10 non-refundable, non-transferable ticket to a Saturday matinee in advance. You're not meeting anyone else for the movie. As the time to head to the theater approaches, you don't really feel like going out and think you'd enjoy yourself more at home. Do you go to the movie anyway?

[If you said, "Yes, I don't want to waste the ticket," you might be employing the sunk cost fallacy - see the link below if you're wondering why.]

2. You bought the same advance ticket as in (1). This time you don't prefer to stay home but you definitely wouldn't have bought it if it were $20. You arrive at the theater and realize you lost your ticket. Luckily, they have more available, still at $10. Do you buy another ticket?

3. You didn't buy the ticket ahead of time. As you get to the theater you realize that a $10 bill has fallen out of your pocket and is lost. Luckily, you still have enough to buy a ticket. Do you do so?

What are your thoughts about sunk cost? Are there any situations in which sunk cost might be an appropriate primary consideration or add benefit in making a decision?


[Credit for scenarios 1, 2, and 3 goes to blog site LessWrong.]


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