Sunk costs are costs that have already been incurred and cannot be recovered. 1

The sunk cost fallacy causes people to stick with a failing decision just because they've already invested in it. 2

Psychological biases like loss aversion and commitment bias make it hard to walk away from sunk costs, even when it is clear you should. 3

Focusing on future outcomes, setting clear limits, and seeking an outside perspective are methods for avoiding the sunk cost fallacy. 4

The A$368 billion AUKUS nuclear submarine project is a great example of the sunk cost fallacy. The Australia government continues to progress a poor decision despite overwhelming evidence that it should not do so.

We are victims of the sunk sub fallacy...