What is the "sunk cost fallacy"? Can I overcome it to solve work challenges?

Have you ever sat through a movie you weren’t enjoying because you’d already bought the ticket?

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Or maybe you've kept working on a project after realizing halfway through that starting over would make more sense.

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That feeling that you should keep going just because you’ve already invested time, energy, and money is what behavioral economists call the sunk cost fallacy.

You see it in small everyday choices, but the sunk cost fallacy can also quietly shape our choices at work. Without realizing it, those past investments can keep you working on a project or approach long after it stops making sense.

So how do you recognize and challenge the influence of the sunk cost fallacy at work?

A sunk cost is time, money, energy, or any other resource you have spent that can’t be recovered.

The sunk cost fallacy is a bias that can affect decision‑making by pulling our attention toward past investments instead of what matters now or in the future.

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For example, you might end up sticking with an idea that isn't really helping anymore simply because it took a lot of time and energy to develop it.

Understanding sunk cost fallacy can help you become more aware of your decision-making when faced with solving a challenge at work.

With a Project

A project isn't quite going according to plan. You’re given more time, more resources, but the results aren’t improving. Someone says, “But we’ve already put so much into this,” and so, you continue unchanged.

With a Platform

You’re using a technical platform that isn’t working well, but the team sticks with it because the license was expensive.

With a Planning Process

A new colleague suggests a clearer planning format, but the team keeps using the old one because they spent months building it, even though it hasn't improved outcomes.

In each example, past investments are driving the decision more than the present situation.

The sunk cost fallacy might influence your work decisions when:

• You've already put in a lot of work. It’s easy to keep pushing a project forward simply because of the time and energy already invested.

• It feels uncomfortable to admit something isn't working. Research suggests people often hesitate to change direction because it means acknowledging that the work put in hasn’t fully paid off.

• Optimism can tip into overconfidence. Some people feel convinced they can still turn things around, so they keep trying one more thing rather than pausing to reassess.

These patterns can make it harder to step back and reassess. They can also make new ideas or solutions too easy to dismiss. In the moment, it’s common to reassure yourself by trying one more thing or sticking with what you’ve already done, even when things aren’t really working.

A Helpful Reminder

This doesn’t mean you should give up as soon as things get difficult, or that past efforts are trivial. Sometimes a project just needs clearer guidance and a few adjustments. Other times, the timing isn't quite right, or the team is facing budget constraints, so change isn't possible.

The challenge is knowing when small improvements can help, and when starting fresh can lead to a better outcome.

So how can you tell when it's worth sticking with something, and when you're only continuing because you feel as though you've invested too much to stop?

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Imagine you’re managing a project that’s been running for months. You’ve created plans, held meetings, and coordinated across teams. But as things progress, you notice:

• the original approach isn't delivering results as expected

• new information suggests a better solution

It’s easy to think:

• "We’ve put so much into this — we can't change direction now."

• "Maybe things will turn around."

• "It's too late to change things now."

These thoughts often pop up. But if this pattern sounds familiar, it's worth checking whether the sunk cost fallacy is influencing the project's direction.

Refocusing the Decision

A helpful shift is to pause and ask:

• If you or the team were starting today, would you choose this approach?

• What are you trying to achieve?

• Are you continuing because it’s effective, or because you've already come so far?

These questions help you move past sunk‑cost thinking and focus on what the situation needs right now to turn it around.

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Scenario

Halfway through a project, you realize things aren't going as expected. Which question helps you assess what to do next?

A. What are some of the consequences of changing direction at this stage?

B. How much time has already been invested?

C. How will other members of the team feel about the decision to restart?

D. What parts of this project could be repurposed?

When you feel your approach to solving a challenge at work is driven by past investments alone, ask yourself:

These questions help you rebalance past effort with what the situation needs now, making it easier to spot the influence of the sunk cost fallacy and help you turn previous work into your next best step.