Bar Bulletin

Bar Bulletin

The Sunk-Cost Fallacy – Why More Discovery May Backfire

February 2018 Bar Bulletin

By Hon. Kim Prochnau (Ret.)
 
In economics, a sunk cost is any cost that has already been paid and cannot be recovered. The sunk-cost fallacy is a mistake in reasoning in which the sunk costs of an activity are considered when deciding whether to continue the activity. This is sometimes called “throwing good money after bad,” because the money and time spent have already been lost and will not be recovered, no matter what you do now. The sunk-cost fallacy makes it more likely that a person or an organization continues with an activity in which they have already invested money, time or...

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