Blog: The Sunk Cost Bias - 2010-09-16
A friend sent me a very interesting article describing something called the Sunk Cost Bias. It's a phenomenon that may help explain why it's so hard for some people to leave the Church of Scientology.
The article describes sunk cost bias as "throwing good money after bad." One persists with a bad decision due to an irrational attachment to the money or time already invested. One tends to persist on a given course just because one already has so much time of effort involved in it.
Let's say you buy a used car. After you've had it for a while, you discover it's a complete lemon. You spend weeks of your own time trying to fix it. You invest thousands replacing this and that, trying to get it to work properly. The smart thing would be to have the thing hauled away. But you've already invested so much time and money in it, you are reluctant to let it go, so you keep trying to fix it. You're throwing good money after bad. The money you've spent is gone. It will never be recovered. You could save the money you are continuing to spend, but sunk cost bias prevents you from doing the rational thing.