Which bias describes continuing to invest in a project after time, money, and effort have already been spent, even when evidence suggests a course change?

Which bias describes continuing to invest in a project after time, money, and effort have already been spent, even when evidence suggests a course change?

• A. Sunk-cost bias
• B. Escalation of commitment bias
• C. Overconfidence bias
• D. Framing bias

Answer: (A)

Continuing to invest after time, money, or effort has already been spent is driven by the urge to recover those irrecoverable costs. This tendency is called sunk-cost bias. The rational way to decide is to ignore past investments and evaluate future costs and benefits, but the sunk-cost bias pulls you to keep going in an effort to avoid realizing a loss. Escalation of commitment bias also involves sticking with a failing course, but it centers on the commitment and justification of prior decisions, often under social or psychological pressure. Overconfidence bias deals with overestimating one’s own judgment or information, and framing bias concerns how information is presented. None of these best explains why past investments would unduly influence the decision to continue.

Continuing to invest after time, money, or effort has already been spent is driven by the urge to recover those irrecoverable costs. This tendency is called sunk-cost bias. The rational way to decide is to ignore past investments and evaluate future costs and benefits, but the sunk-cost bias pulls you to keep going in an effort to avoid realizing a loss.

Escalation of commitment bias also involves sticking with a failing course, but it centers on the commitment and justification of prior decisions, often under social or psychological pressure. Overconfidence bias deals with overestimating one’s own judgment or information, and framing bias concerns how information is presented. None of these best explains why past investments would unduly influence the decision to continue.