There is a human tendency to stay with something after we have put a lot of time, energy, money etc. into it – even when it no longer makes sense.

After a significant amount of money is lost, some gamblers will stay the course only to increase their pain.

Some stock traders will watch stocks go down and down and won’t consider getting out hoping “the bottom is in” only to see it trek lower.

Owning a car that is a lemon is a trying experience. I’ve witnessed people paying month after month for repairs. It’s almost like they have accepted their lot and automatically, without thinking, keep dumping money into a POS.

There’s a time to cut your losses and run. Many people just can’t seem to find that point.

The Sunk Cost Fallacy (SCF) can be applied to so many parts of life: Education, careers, relationships, home ownership – it is a universal concept.

The fallacy also occurs with diet and exercise.

Continue reading Sunk Cost Fallacy →