What is Sunk Cost? ...and the Sunk Cost Fallacy?

The video tutorial explains the concept of sunk cost, which refers to past investments that cannot be recovered. It highlights the sunk cost trap, a common fallacy where individuals make decisions based on past investments rather than future benefits. An example involving a prototype product is used to illustrate this trap. The tutorial emphasizes the importance of focusing on future costs and benefits in decision making, rather than being influenced by irrecoverable sunk costs. It also explores the psychological factors that contribute to the sunk cost trap, such as emotional and political investments.

What should be the primary consideration when making a decision about a sunk cost?

What psychological factors contribute to falling into the sunk cost trap?

How can one avoid the sunk cost trap in project decision making?