Saturday, October 19, 2019

Sunk Cost Effect : Psychology of Sunk Cost

The psychology of sunk cost, also called the sunk cost effect, refers to a finding that people tend to continue investing time, money, or effort into an activity, despite evidence that the increased effort will not likely yield the desired outcome. Work by Kahenman (e.g., 2011) and others document the sunk cost effect.

In common language, the effect has been called "throwing good money after bad" as when an investor continues to purchase stock despite a precipitous decline in stock price.

In "sunk relationships," one partner may invest considerable effort to win the other back even though  friends agree there is little or no hope for restoring the relationship.

People may hang on to old clothes they have rarely or never worn just because they spent so much on the purchase.

The sunk cost effect can also be seen in religion. For example, people who have a firm commitment to a belief despite evidence that many holding a similar faith no longer hold such a rigid belief. The religious person may vigorously invest time, effort, and money defending the previously held belief. This sunk cost effect has been applied to beliefs that divide Christians (Sutton, 2013, 2016).

Arkes & Blumer (1985) linked the sunk cost effect a desire not to appear wasteful in people who increased their attendance following the high price paid more for a season ticket (DOI:10.1016/0749-5978(85)90049-4).


Kahneman, D. (2011). Thinking, fast and slow. New York: Farrar, Straus & Giroux.

Sutton, G. W. (2016). A house divided: Sexuality, morality, and Christian cultures. Eugene, OR: Pickwick. ISBN: 9781498224888

Note: Sinking Ship Image from Bing "Free to share and use commercially" 19 Oct 2019


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