# Sunk Cost Fallacy

*Behavioral Finance — Finicade finance glossary*

The sunk cost fallacy is letting unrecoverable past spending justify further commitment. Rationally, only future costs and benefits matter — what's spent is gone whatever you decide next. It keeps investors in failing positions, companies in failing projects and founders in failing products, and the phrase that signals it is 'we've already put so much into this'.

**Also known as:** sunk costs, escalation of commitment, throwing good money after bad

**Related terms:** [Opportunity Cost](https://finicade.com/glossary/opportunity-cost), [Loss Aversion](https://finicade.com/glossary/loss-aversion), [Disposition Effect](https://finicade.com/glossary/disposition-effect), [Behavioral Biases](https://finicade.com/glossary/behavioral-biases), [Pivot](https://finicade.com/glossary/pivot)

**Taught in:** Mind Over Markets — The Sunk-Cost Fallacy

Source: https://finicade.com/glossary/sunk-cost-fallacy