The Sunk Cost Trap
Written by Studio AM.
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You have paid for a concert ticket that cannot be refunded or resold, and on the evening of the show you feel exhausted and unwell. Going would be miserable. Yet a voice insists you must go, because you already paid. That voice is the sunk cost fallacy, when the unrecoverable payment is treated as a reason to attend.
A sunk cost is money, time, or effort already spent that cannot be recovered no matter what you do next. The ticket price is gone whether you attend or stay home. A rational choice compares the options still available: given where I am now, what is the best use of my evening? The past payment is irrelevant to that question, because nothing you choose tonight can bring it back.
The fallacy can be persuasive because quitting may feel like waste. So we sit through bad films, finish tasteless meals, and stay in failing projects, telling ourselves that stopping would throw away what we invested. But the investment is already gone. Continuing cannot recover a sunk cost by itself. It is worth considering only if the remaining benefits justify the remaining costs.
A useful check is to ask: knowing what I know now, and ignoring what I have already spent, would I choose this again from here? If the answer is no, the money and hours already gone are not a reason to continue. You can use what the experience taught you without treating its unrecoverable cost as a new benefit.
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Questions
Choose an answer. The explanation appears after you answer.
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Question 1 of 4
What is the passage mainly about?
The answer is A: Compare remaining options without treating unrecoverable spending as a reason to continue.
The passage distinguishes what is already unrecoverable from the future costs and benefits of the available options.
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Question 2 of 4
What is a sunk cost, according to the passage?
The answer is B: Money, time, or effort already spent that cannot be recovered
The text defines it as 'money, time, or effort already spent that cannot be recovered no matter what you do next.'
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Question 3 of 4
The author would advise someone stuck in a failing project to:
The answer is A: Compare remaining benefits and costs without treating sunk spending as a reason to continue.
The diagnostic question ignores 'what I have already spent' and asks whether you would choose it again from here.
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Question 4 of 4
What does 'rational' mean in this passage?
The answer is A: based on clear reasoning
The choice compares reasons and available options rather than following the feeling that the ticket must be used.
Score: none answered yet.