Sunk Cost

Resources already spent that cannot be recovered and should therefore be irrelevant to future decisions. The sunk cost fallacy—continuing to invest because of past investment rather than future expected returns—is one of the most pervasive decision errors in both personal and organizational life. The emotional mechanism: abandoning a project feels like wasting the past investment, even when continuing wastes future resources. The only rational question: given where you are now, what's the best path forward?

When to use it

When facing strategic decisions under uncertainty; when multiple stakeholders have competing interests; when the stakes are high and reversibility is low.

How it can help

Provides frameworks for navigating competitive landscapes, allocating resources under uncertainty, and making high-stakes decisions with incomplete information.