The Psychology of Sunk Cost
Hal Arkes & Catherine Blumer · 1985
"People irrationally continue investing time, money, or effort into a failing course of action specifically because of what they've already invested — even though that past investment is gone regardless of what they do next, and only future costs and benefits should matter to the decision."
In one of the paper's field studies, theatergoers who paid full price for a season subscription attended significantly more plays over the following months than those who bought the same subscription at a discount — the higher sunk cost created a stronger pull to keep attending, even though the ticket price had no bearing on how enjoyable any individual play would be.
Arkes and Blumer's explanation centers on a desire not to appear, to ourselves or others, as wasteful: abandoning a project after investing heavily in it feels like admitting the investment was a mistake, so people keep going specifically to avoid that admission, which is a purely psychological cost, not a rational one, since the sunk resource is gone either way. This is why the fallacy shows up in relationships, failing projects, and investments alike — the more that's already been poured in, the harder it becomes to walk away, even as the case for walking away gets stronger.
What did the theater subscription study in 'The Psychology of Sunk Cost' demonstrate?
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- The Psychology of Sunk CostScienceDirect
Motivated Stopping
"When you want to believe something, you stop looking for evidence at the first confirming fact. When you don't want to believe it, you demand impossible proof."