sunk cost
Money already gone
A sunk cost is money, time, or effort already spent that cannot be recovered.
The concept matters most in decision-making: rational choices should ignore sunk costs and focus on future outcomes.
The sunk cost fallacy is continuing something because of past investment rather than future benefit: We've already put so much into this project justifies throwing good money after bad.
Recorded value reduction
- lossBeing without something
- wastedUsed without good result
- unrecoverableImpossible to regain
- irretrievableImpossible to regain
nonrefundable · spent · expended · depleted · gone · squandered · misspent · forfeit
Progressive increase in intensity
- entrenchmentFortified or fixed position
- loss aversionSetbacks sting more than gains please
- behavioral economicsPsychology of financial decisions
- throwing good money after badWasting resources on failures
doubling down · perseverance · stubbornness · obstinacy · inertia · cognitive bias · emotional attachment · justification
Expenses unchanged by output
- variable costsExpenses changing with output
- microeconomicsEconomics of small-scale decisions
- economic theoryModel of resource allocation
- incentivesRewards prompting action
trade-off · scarcity · resource allocation · diminishing returns · rational choice · accounting · budgeting · financial analysis
Wealth used for investment
- ROIProfit-to-cost ratio
- portfolioCollected works or assets
- ventureRisky new undertaking
- equityImpartial treatment or ownership value
asset · financial loss · startup costs · upfront payment · research and development · infrastructure spending · pivot · exit strategy
write-off
Recorded value reduction
- lossBeing without something
- wastedUsed without good result
- unrecoverableImpossible to regain
irretrievable · nonrefundable · spent · expended · depleted · gone · squandered · misspent · forfeit · consumed
escalation
Progressive increase in intensity
- entrenchmentFortified or fixed position
- loss aversionSetbacks sting more than gains please
- behavioral economicsPsychology of financial decisions
throwing good money after bad · doubling down · perseverance · stubbornness · obstinacy · inertia · cognitive bias · emotional attachment · justification · rationalization
fixed costs
Expenses unchanged by output
- variable costsExpenses changing with output
- microeconomicsEconomics of small-scale decisions
- economic theoryModel of resource allocation
incentives · trade-off · scarcity · resource allocation · diminishing returns · rational choice · accounting · budgeting · financial analysis · depreciation
capital
Wealth used for investment
equity · asset · financial loss · startup costs · upfront payment · research and development · infrastructure spending · pivot · exit strategy · due diligence
- behavioral economicsloss aversion, nudge, anchoring, cognitive bias, heuristics
- cost analysisdirect costs, fixed costs, unit costs, operating expenses, operating expense
- costsoverhead
- gambling psychologygambler's fallacy, loss aversion, illusion of control, chasing losses, near miss
- cost accountingdirect costs, indirect costs, fixed costs, variable costs, overhead
- economicssupply and demand, inflation, GDP, GNP, gross domestic product
sunk costliquid asset
Easily converted wealth
cash on hand · salvage value · variable cost · working capital
sunk costopportunity cost
Sacrificed alternative's worth
expected value · marginal benefit · growth potential · variable cost
cost, sunk, sunken, sunk costs