Sunk cost fallacy: wrong decision due to past investments

Sunk Cost Fallacy describes a cognitive error of judgement in which decisions are made on the basis of irreversible investments that have already been made - instead of focusing on future costs and benefits. A typical example is sticking with projects even though they no longer objectively promise any added value simply because time, money or energy has been invested. In a business context, this false conclusion can lead to inefficient use of resources and poor strategic decisions. Rational action requires the conscious differentiation of sunk costs and forward-looking thinking.