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decision making
You continue losing ventures because of the investment already made.
A 1985 study found that people are more likely to continue investing in a failing project if they have already committed significant time or money to it.
The sunk cost fallacy occurs when individuals treat past investments as a reason to persist, rather than focusing on future utility. The brain views abandonment as a 'loss' of the original investment, triggering a desire to 'make it worth it'.
You are often holding onto the past to justify the effort you cannot get back.
Where this comes from
- Study
- Arkes and Blumer, 1985, Organizational Behavior and Human Decision Processes
- What the check found
- The cited paper, 'The Psychology of Sunk Cost' by Arkes and Blumer (1985), is the foundational study for this concept in behavioral economics.
- Confidence
- Well replicated
Related
One of these every day, and every one names the study it came from. When a finding is contested, it says so.