Sunk Cost Fallacy
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[edit] Definition
The Sunk Cost Fallacy is an informal logical fallacy in which it is argued that the amount of time, effort, or money already invested in a project justifies the investment of yet more time, effort and money in order to complete the project.
This is a fallacy because the actual economic calculation which needs to be made is whether the project would be worth completing at the cost of the investment which still remains to be made.
Following the dictates of the sunk cost fallacy is sometimes referred to by the curious phrase "throwing good money after bad".
This fallacy can occur because people try to avoid changing their minds once they make a decision, especially if they are in a position of authority, where changing one's mind could be interpreted as admitting a mistake or being indecisive/weak.
[edit] Examples
Protagonist : There was no real point in going to Mars. By cancelling the project, the government has saved us the money which remained to be spent.
Antagonist : It may be true that the Mars mission is not really vital to our national interests. But the fact is that we've already spent billions of dollars on the project, and if we pull the plug now all that money will have been wasted.
Now the real calculation that needs to be done involves the amount of money remaining to be spent. If it costs another hundred billion dollars to complete the project, then we can, in effect, go to Mars for a hundred billion dollars: and if only another dime needs to be spent, then we can, in effect, go to Mars for a dime. The amount of money which has already been spent, whether it's one dollar or a trillion, does not enter in any way into this calculation.
[edit] Exceptions to the Rule
There are no real exceptions to this rule. However, contemplation of sunk costs may serve as a powerful psychological motivation to complete a difficult or arduous task which really is worth completing: "If I don't finish (such and such a genuinely worthwhile activity), all my hard work so far will have been for nothing". This is still, in fact, a fallacy: either the thing is worth finishing, or it isn't --- but arguably it is a psychologically useful fallacy in such cases.
