Tag: Sunk Cost Fallacy

Are You Throwing Good Money After Bad?

Illustration of the Sunk Cost Fallacy through a paper boat made from a dollar bill, and dragged down by an anchor shaped like a dollar sign, seen through transparent water.

The Sunk Cost Fallacy is a cognitive bias in which people make decisions (time, money, effort/resources) based on past costs, even when those costs are no longer relevant. In other words, people continue to invest in a failing project or venture because they have already invested time, money, or effort into it.

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Mental Models: Cognitive Biases

Cognitive biases are systematic errors in our thinking that can impair decision-making by leading to irrational judgments. By understanding these biases, we can better recognize their impact on our thought processes and avoid their negative effects.

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