What do I need to know about sunk cost fallacy?

The Irrational Tech: Part 2

This is a series. Find Part 0 here.

Have you ever been coding something one way, realised that approach was doomed, but kept slogging away longer than you maybe should have?

If so, Sunk Cost fallacy might have been the culprit!

Sunk costs fallacy relates to our tendency towards basing decisions on honoring previous costs, rather than purely the future consequences.

You continue down a path when that path is a bad path, just because you have already invested so much effort. People say things like “well, I’ve come this far…”. It could have been a design, or even a whole project.

Take anything related to Flash development and you’ll probably find an good example of sunk costs! I have a friend who still has a Flash site. He knows it is not working for him (poor SEO, limited CMS, can’t even see it on a iPhone) yet he will not give it up since it cost so much to build in the first place!


Yes, sunk costs are so painful…

Be aware of what sunk costs you might be taking into account in your decision making. Look to maximize your utility in the future.

Try framing decision with the question, are we considering future consequences only?

Tweet me your thoughts @juliaclavien!

Check out more of the biases and fallacies posts -

Part o: Why should I be interested in rationality?

Part 1: What do I need to know about the planning fallacy?

Part 3: What do I need to know about groupthink?

Part 4: What do I need to know about hyperbolic discounting?

Daniel Kahneman — Thinking Fast and Slow

Julia Clavien — Cognitive Bias In Software Development