Sunk Cost Fallacy

Rational decision-making requires ignoring past investments and choosing based solely on future costs and benefits. The sunk cost fallacy is our inability to do this. Arkes and Blumer's landmark 1985 study showed that people consistently throw good money (and time, and emotional energy) after bad because they've already committed resources. Couples stay in failing relationships because of years invested. Businesses continue funding failing projects because of prior spend. Governments keep troops in unwinnable wars because of previous casualties. The psychological mechanism is loss aversion: stopping feels like confirming the past was wasted, even though the past is gone regardless.