Sunk Cost Fallacy
The concept of the Sunk Cost Fallacy can be understood as a trap where people often make decisions based on past investments, rather than future outcomes. This means that people continue to invest in past projects just because they have already invested so much, even though it is no longer beneficial or rational.
For example, a company invests heavily in a product even when market research shows a decline in demand simply because they have already put so much effort into it. This tendency to stick with a failing project due to past investments is a trap that many individuals and businesses fall into.
Real-Life Examples of Sunk Costs
Concorde Supersonic Jet: The story of the Concorde project, which was an effort between French Aerospace companies serves as a classic illustration of the sunk cost fallacy. Despite facing issues and significant financial setbacks the project persisted for, more than twenty years because of the substantial resources already poured into it. Eventually, it was halted.