Sunk cost effect

From Market
Jump to: navigation, search
This article gives a basic definition in behavioral economics.
View a complete list of basic definitions in behavioral economics


The sunk cost effect refers to the phenomenon whereby people are willing to incur additional losses in order to preserve the value or utility of things they have already spent money on, so that they do not feel that the money they originally spent was a waste. It arises from people's inability to reconize a sunk cost.