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The beginning of a new year is often a time when we might be more prone to creating new investments, projects, and goals that we want to achieve in the next 12 months. However, what if in six months we realise these new endeavours are not serving us in a way we initially thought they would and are becoming detrimental to us instead? Will we be able to give these up? Research suggests not so easily, due to a phenomenon called ‘sunk cost bias’. 

What is sunk cost bias? 

Sunk cost bias can be defined as a “tendency to continue an endeavour once an investment in money, effort, or time has been made” (Arkes and Blumer, 1985, p. 124). This tendency occurs even when letting the endeavour go, or changing to a different endeavour, would be more favourable and promising (Domeier et al., 2018). This is because we form an emotional attachment due to the investment that we have put into it, making it difficult to let go and so continuing to persist with these choices that are no longer serving us (Ronayne et al., 2021). 

Why does it occur and who does it occur for?

Several contributing forces mean we continue with endeavours that are no longer beneficial, or even perhaps damaging, for us. For example, within the brain, the nucleus accumbens releases dopamine when a decision is seemingly going well, generating an emotional attachment to the decision and making it harder to let go of (Haller & Schwabe, 2014). Another example is our ego getting in the way of giving up on detrimental decisions if we think there might be the risk of damaging our self-image by doing so (Hendriks et al., 2022). This demonstrates how the sunk cost bias can be experienced by any one of us. Yet, it seems that some people may be more susceptible to this bias than others. 

Research suggests that age may be related to susceptibility to the sunk cost bias. For example, Strough et al. (2016) found that the older a person was, the more willing they were to give up on the plan they made that was subsequently failing, and so younger people may be more susceptible to this bias. Other factors include personality: Fujino et al. (2016) found that those who score highly on agreeableness and conscientious scales, and adhere to rules and regulations, are more prone to this bias, and mindset: Putten et al. (2010) suggest those with an action-oriented mindset can more easily move on from past investments, making them less likely to fall victim to this bias. 

4 Bias Busting Strategies

While it may not bring comfort to know that we can all experience this bias, there are ways that we can reduce our susceptibility and learn when to abandon decisions that are no longer benefiting our lives.

1. Engage in introspection: Strough et al. (2016) found that people were less likely to experience the sunk cost bias when they were encouraged to stop and think and reflect. Take a moment to stop and think, describe your thoughts and feelings about problem or situation. Reflection and personal introspection can help reduce your susceptibility to this bias by critically examining optimistic thoughts and potentially unrealistic positivity.

2. Let technology take control: Research conducted by Herrmann et al. (2015) suggests that one way we can overcome the sunk cost bias is to let technology have some oversight on our decisions. The researchers found that when their participants allowed decision management software to assist the decision-making process, they had a reduced emotional attachment to their decisions and were consequently less prone to this bias. For example, using banking software to monitor spending.

3. Lay out a roadmap: Another solution proposed by Courtney et al. (2019), is to lay out a roadmap with parameters set at the beginning of the project and commit to sticking to it. If you set out certain goals that the project has to meet by certain times and understand that the project should be abandoned if it does not meet your goals, you will feel more able to let go when your goals are not met. 

4. Introduce positive affect to increase cognitive flexibility: Emich and Pyone (2018) found that inducing ‘positive affect’ in other words positive feelings and emotions, through watching a positive video or bringing to mind a positive memory, reduced individuals’ vulnerability to sunk cost bias, and enhanced their cognitive flexibility.

When people have higher cognitive flexibility, they are more likely to consider other factors that are relevant to decision-making, rather than just relying on past investments of time, money, or positive associations from rewards that are no longer forthcoming. Introducing more small instances of positive affect in your daily life can also draw your attention away from the positive memories associated with the endeavour and bring more clarity to present day decisions.

Creating space for opportunity

By engaging in just one of these methods, you can have more control over your sunk cost bias, and understand when to let go. Remember that, by letting go, you are creating more space in your life for something more rewarding and worthwhile.

If you want to learn more about sunk costs and delve deeper into the neuroscience behind why we are prone to sunk cost bias, check out Episode 53, “The neuroscience of sunk cost: why do we throw good money after bad”, of The Chief Psychology Officer podcast at https://www.thecpo.co.uk.