Which term describes continuing a course of action because you've already invested time and resources, even when stopping would be better?

Which term describes continuing a course of action because you've already invested time and resources, even when stopping would be better?

• A. Sunk cost
• B. Sunk cost fallacy
• C. Irrational continuation
• D. Emotional investment

Answer: (B)

The idea being tested is that people sometimes keep going with a plan simply because they’ve already invested time, money, or effort into it, rather than because it’s still a good decision. The best label for this is the sunk cost fallacy. A sunk cost is something you can’t recover, and rational decision making should ignore those past costs and focus on future costs and benefits. When the past investment unduly sways you to continue, even though stopping would reduce losses or improve outcomes, that’s the fallacy at work. For example, staying in a project that’s clearly failing just because you’ve already spent a lot on it is the fallacy in action. Simply calling it a sunk cost points to the unrecoverable expense, but doesn’t name the decision error. “Irrational continuation” describes the behavior but isn’t the standard term, and “emotional investment” is related but too general to capture why the past costs should not determine the present choice.

The idea being tested is that people sometimes keep going with a plan simply because they’ve already invested time, money, or effort into it, rather than because it’s still a good decision. The best label for this is the sunk cost fallacy. A sunk cost is something you can’t recover, and rational decision making should ignore those past costs and focus on future costs and benefits. When the past investment unduly sways you to continue, even though stopping would reduce losses or improve outcomes, that’s the fallacy at work.

For example, staying in a project that’s clearly failing just because you’ve already spent a lot on it is the fallacy in action. Simply calling it a sunk cost points to the unrecoverable expense, but doesn’t name the decision error. “Irrational continuation” describes the behavior but isn’t the standard term, and “emotional investment” is related but too general to capture why the past costs should not determine the present choice.