Sunk Cost Fallacy is throwing more in because we already threw a lot in. It sits in the Cognition dimension (COG) of the Human Behavior Taxonomy™ as element HBT-COG-0649, within the Decision Bias family. The core principle: throwing more in because we already threw a lot in. In incentive terms, it matters because it changes the payoff people perceive before they choose — which means it can be designed for, or exploited.
Scientific Definition
Throwing more in because we already threw a lot in.
Plain-English Definition
Throwing more in because we already threw a lot in.
Feynman Explanation
We've spent $20M; let's spend $5M more to feel better about the $20M.
Core Principle
Throwing more in because we already threw a lot in.
Mechanisms
Throwing more in because we already threw a lot in.
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Inputs (Triggers)
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Outputs (Behaviors)
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Behavioral Signature
We've spent $20M; let's spend $5M more to feel better about the $20M.
Examples
- Five-year initiative kept alive purely because killing it 'wastes' the spend.
- Portfolios bloated with bets no one would start today.
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Original analysis from The Incentives Lab — how this element behaves inside real payoff structures.
Why this element matters to incentive design
This is one of the elements leaders describe as a values gap. It is a payoff gap. The mechanism underneath it is straightforward: throwing more in because we already threw a lot in. You can recognize it in the field by its signature: we've spent $20M; let's spend $5M more to feel better about the $20M. Every element in the Cognition dimension changes the perceived payoff of an action before the action happens, which is exactly where incentive design has leverage.
How it gets exploited
Left undesigned, legacy systems preserved because of integration cost, not value delivered. It is amplified whenever portfolios bloated with bets no one would start today. Inside organizations that shows up as portfolios bloated with bets no one would start today. The pattern is the same one Goodhart's Law describes: the measurable proxy attracts the effort, and the purpose behind it quietly loses funding.
How the Lab designs around it
The redesign move is to ask: 'If we were starting fresh, would we fund this?' Honor the answer. The test of any redesign here is simple: after the change, can you name what the organization is now doing less of? If not, the payoff structure did not actually move.
Famous Experiments
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Design Principles
- Ask: 'If we were starting fresh, would we fund this?' Honor the answer.
Measurement Approaches
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Evidence
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The Perverse Incentive Lens™
How this behavior is exploited — and how to redesign around it.
- Ask: 'If we were starting fresh, would we fund this?' Honor the answer.
Pending editorial review.
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Interactive Mini Network
Click any neighbor to re-center the graph and follow the threads of connection.
Knowledge Graph Neighbors
Auto-linked to the rest of the Human Behavior Taxonomy by family, domain, dimension, and shared keywords.
Doing something feels safer than doing nothing — even when nothing wins.
Feelings act as shortcuts for facts.
Over-reliance on the first number that hits the table.
Adding a clearly worse option steers people toward the option you wanted.
Whatever is pre-selected wins more often than it should.
We value things more once they're ours.
The same information lands differently depending on how it's wrapped.
We disproportionately prefer rewards now over rewards later.
We overvalue things we built ourselves.
Believing more information leads to better decisions, regardless of relevance.
When trivial metrics become the target, the trivial becomes the strategy.
Losses hurt roughly twice as much as equivalent gains feel good.
Where Sunk Cost Fallacy is cited in the corpus
Essays, field guides, and diagnostics from The Incentives Lab that apply this element.
- EssayGoodhart's Law in the Real World
How measurable proxies capture judgment.
- EssayThe Perverse Incentives Hiding in Your KPIs
Cognitive shortcuts turned into scorecards.
- CourseIncentives 101
The free ten-part primer on reading a payoff structure.
- ReferenceThe incentive glossary
Definitions for every mental model, bias, and fallacy in the corpus.
- ReferenceThe Periodic Table of Human Behavior
The full 1,267-element map this page belongs to.
Questions about Sunk Cost Fallacy
- What is Sunk Cost Fallacy?
- Sunk Cost Fallacy is throwing more in because we already threw a lot in. It sits in the Cognition dimension (COG) of the Human Behavior Taxonomy™ as element HBT-COG-0649, within the Decision Bias family. The core principle: throwing more in because we already threw a lot in. In incentive terms, it matters because it changes the payoff people perceive before they choose — which means it can be designed for, or exploited.
- What is an example of Sunk Cost Fallacy?
- Portfolios bloated with bets no one would start today. The Incentives Lab catalogs everyday, organizational, and historical instances of this element on its Human Behavior Taxonomy™ page (HBT-COG-0649).
- How is Sunk Cost Fallacy exploited?
- Legacy systems preserved because of integration cost, not value delivered.
- How do you design around Sunk Cost Fallacy?
- Ask: 'If we were starting fresh, would we fund this?' Honor the answer.
- Which behavioral dimension does Sunk Cost Fallacy belong to?
- Sunk Cost Fallacy is classified in the Cognition dimension (COG) of the Human Behavior Taxonomy™, family "Decision Bias", class "Cognitive Bias". Its permanent identifier is HBT-COG-0649 and its evidence grade is B.