Sunk cost fallacy.
In plain English
The sunk cost fallacy is the pull to keep investing money, time, or effort into something because of what you have already put in, rather than deciding on what is best from here. Arkes and Blumer demonstrated it in 1985 and tied it to not wanting to appear wasteful. The money or time already spent is gone either way, so a good decision looks only at future costs and benefits. In finance it keeps people in a losing investment to avoid realizing the loss, or in a costly plan because they have paid into it so far.
01Why it matters
Money and time already spent cannot be recovered by continuing, so recognizing the sunk cost fallacy frees you to judge a decision on what happens next rather than on protecting a past outlay.
02The math, step by step
You have poured 3,000 dollars into repairs on an aging car, and now it needs 2,000 more. The 3,000 is gone regardless. The only question that helps is whether 2,000 for this car beats other options going forward, but the past spending tempts you to keep pouring money in.
03What this is NOT
It is not admirable persistence. Sticking with something because it still makes sense going forward is fine. The fallacy is continuing mainly to justify what you already spent, which the past outlay cannot change either way.
04Receipts
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