The Sunk Cost Fallacy: Concept breakdown
This psychological trap prevents us from making decisions.
Ever stuck with something way too long because you already invested time, money, or energy into it? Maybe it was a TV show that stopped being interesting after season two or a job you’ve outgrown but feel guilty leaving. This is the Sunk Cost Fallacy in action.
The Sunk Cost Fallacy is our irrational tendency to continue investing in something simply because we've already put time, money, or effort into it. We cling to failing investments, unfulfilling relationships, or tedious books because abandoning them would mean "wasting" our previous investments.
How It Shows Up
Staying in a bad relationship because “we’ve been together for years.”
Finishing a book you’re not enjoying because “I already read 100 pages.”
Keeping a subscription you barely use because “I’ve already paid for the year.”
Continuing a career path that drains you because “I’ve worked too hard to change now.”
Why We Fall For It
Emotional attachment to past decisions - We develop psychological ownership over our choices, making it painful to admit a decision was wrong. Abandoning the investment feels like invalidating our past judgment and admitting failure.
Fear of waste and loss aversion - Humans are wired to hate waste and feel losses more intensely than equivalent gains. Abandoning a sunk cost feels like finalizing a loss, triggering a powerful psychological aversion.
Desire for consistency and commitment - We value being seen (by ourselves and others) as consistent and committed rather than fickle. Sticking with failing investments paradoxically feels virtuous.
What To Do Instead
Focus on Future Value – Ask yourself: "If I hadn’t started this already, would I choose to start today or take up this endevour?"
Practice Detachment – See your past investments as tuition for a lesson learned and bucket them as no longer serving you, thus freeing yourself emotionally.
Shift the Story – Let go of guilt by praising yourself for a great lesson and frame the change as a sign of growth, not failure.
How Does It Affect Me?
Blocks growth – Sticking with the wrong activity prevents you from finding what’s right and keeps you from your better version.
Drains energy – You’re investing in something that isn’t giving anything back. Being being honest with yourself could be hard, but it’s worth it.
Delays change – Waiting for a return on a dead-end path only postpones the inevitable bitter truth.
Today’s Newsletter Challenge
Think of one area where you’re sticking with something just because you’ve already committed time and energy or promised something to someone you know. Ask yourself: If I were starting fresh today, would I still choose this? If not, it might be time to let go.
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