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Placeholder Lesson:
** This lesson is generated with AI assistance and approved by Danny Nelson. This lesson will communicate the essence of the topic for now until Danny can create a full lesson. **
The sunk cost fallacy is the tendency to continue an action because of resources already invested, even when it’s no longer wise.
People feel compelled to “get their money’s worth,” even if that means making things worse.
For example, someone may hold a losing investment because they’ve already put so much into it.
This bias ignores the fact that past costs cannot be recovered.
It leads to decisions driven by emotion rather than future benefits.