Cognitive biases and judgment · 5/6

Sunk cost: does past effort justify continuing?

Separate unrecoverable effort from costs and benefits that still change with your choice.

About 15–20 minutes. The following cases are fictional.

Record your first judgment

You have spent 30 hours organizing a personal website and need another 10. An alternative takes 4 hours to reach the same goal. You say switching would waste everything already invested.

My initial judgment, confidence and reasons

Understand the judgment process

Past investment that your current choice cannot recover is sunk. It explains how you arrived here but its size alone does not justify continuing.

Future switching costs, refunds, penalties and reusable work are not all irrelevant past costs. Ask whether they change with the available choices.

Persistence need not be biased: continuing may offer better future value or lower switching risk. Stopping is not automatically rational either.

Checks you can perform

List feasible continuation, pause and switching options.
Separate unrecoverable past costs to avoid counting them again.
Compare future costs, benefits, risks and reusable assets for each option.
Ask what you would choose if inheriting this situation today and set review conditions.

Guided practice

Switching also requires 3 migration hours. With equal quality and risk provisionally assumed, compare future time. What if migration takes 8 hours?

My analysis and checking plan

Explore the explanation

Continue: 10 hours. Switch: 4+3=7, saving 3. The past 30 hours are unrecoverable, not additions to future options. With 8 migration hours, switching takes 12, so continuing requires less future time. Verify quality, risk and estimates before deciding.

Apply it in a new context

A non-refundable event ticket conflicts with a more important plan. What belongs in the comparison?

My independent response

Compare after attempting

Attendance does not recover the paid price. Compare future time, transport, enjoyment and the opportunity cost of the other plan. If transferable, resale proceeds vary with your choice and matter. Neither automatic attendance nor automatic cancellation is justified.

Preserve a revision record

What changed your judgment? What still supports it? When will you review?

This is general decision practice, not a substitute for expertise required by specific contracts or high-stakes decisions.

Check whether you supplied inspectable evidence, a feasible next step and revision conditions. Revealing an answer is not mastery.

Source and scope

Arkes & Blumer (1985), The psychology of sunk cost

The source provides conceptual or methodological background. Cases, steps and exercises are authored here; they are not the original experiment or evidence of this course’s effectiveness.

I have completed this section; uncheck to undo

Completion is a personal record, not proof of mastery or certification.