Should you continue to invest time, money and effort into a project even when its future success looks doubtful? In a bid to recover the loss, do you ignore the evidence in front of you and follow through with that endeavour? Many companies and public bodies face this predicament regularly, particularly in these uncertain Covid times.
The sunk cost bias refers to the behavioural tendency of continuing an endeavour, even if the outcome might not be advantageous. This could relate to ongoing investment in business, for example, or an emotional investment made in a relationship. Based on evidence from hypothetical scenarios, the sunk cost bias has come to be widely accepted in psychological research. In common parlance, it is also referred to as, ‘throwing good money after bad’.