What is sunk cost effect? - Definition from WhatIs.com
Part of the Business terms glossary:

The sunk cost effect is the tendency for humans to continue investing in something that clearly isn’t working.

Because it is human nature to want to avoid failure, people will often continue spending time, effort or money to try and fix what isn’t working instead of cutting their losses and moving on. This tendency, which is known as the sunk cost effect, can be illustrated by the adage “throwing good money after bad.”

In nature, the sunk cost effect is known as the Concorde effect. 

This was last updated in March 2013
Posted by: Margaret Rouse

Related Terms

Definitions

  • LinkedIn

    - LinkedIn is a social networking site for the business community. The LinkedIn service allows registered members to establish and document networks of people they know and trust professionally. (WhatIs.com)

  • GAAP (generally accepted accounting principles)

    - GAAP (pronounced "gap"), which stands for "generally accepted accounting principles," is a collection of commonly followed accounting rules and standards for financial reporting. (WhatIs.com)

  • fishbone diagram

    - A fishbone diagram is a visualization tool for categorizing the potential causes of a problem in order to identify its root causes. Other names for the fishbone diagram include cause and effect dia... (WhatIs.com)

Glossaries

  • Business terms

    - Terms related to business, including definitions about project management and words and phrases about human resources, finance and vertical industries.

  • Internet applications

    - This WhatIs.com glossary contains terms related to Internet applications, including definitions about Software as a Service (SaaS) delivery models and words and phrases about web sites, e-commerce ...

Ask a Question About sunk cost effectPowered by ITKnowledgeExchange.com

Get answers from your peers on your most technical challenges

Tech TalkComment

Share
Comments

    Results

    Contribute to the conversation

    All fields are required. Comments will appear at the bottom of the article.