Concept
The sunk cost fallacy
The sunk cost fallacy is letting what you have already spent, money, time, effort, love, influence what you do next, even though it is gone whatever you decide. Dobelli calls it the most expensive error in the book.
Rationally, only future costs and benefits should count; the past is fixed. But stopping turns a hoped-for recovery into a confirmed loss, and loss aversion makes that feel far worse than continuing, so people stay in bad projects, bad investments and bad relationships because of what they have put in. The Concorde flew at a loss for decades because Britain and France had invested too much to stop. Dobelli's cutting question is: if I were starting today, knowing what I know now and with nothing invested, would I choose this? If not, the only reason you are still here is the cost, and the cost is not coming back.
A real-life example
A founder two years and most of his savings into a delivery app with four hundred users asks the question and answers no. He shuts it down within a month, and the sentence that helps is that the two years were the price of the lesson, not an argument for paying more.
How to use it
- 1When you hear 'we have come this far' or 'after all I have put in', stop; the cost has no vote.
- 2Ask whether you would start this today with nothing invested, and answer honestly.
- 3Treat stopping as a new decision, not a verdict on the old one.