Where does sunk cost collide?

A cost already paid and impossible to recover, which standard economics says should have no bearing on any forward-looking choice: because the money or effort is gone whatever you do next, a rational agent weighs only future costs and benefits and treats what is already spent as irrelevant. William Stanley Jevons stated the principle in his 1871 Theory of Political Economy: in commerce, he wrote, “bygones are forever bygones,” and we judge the value of things only with a view to future utility. It is still taught as one of the basic principles of economics, as McAfee, Mialon, and Mialon note at the start of their 2010 Do sunk costs matter? Here the word names an attribute of a cost and a rule for setting it aside, not the human tendency to fail at that rule, and not any claim about how animals behave.[1][2]

Unit

A quantity of money, time, or effort already spent and unrecoverable

Recovery means

By definition none: a cost counts as sunk only when it cannot be recovered

Measured by

Identified by asking whether a past outlay changes with any future choice; if it does not, it is sunk

The tendency to continue an endeavour once money, effort, or time has been put into it, even when that prior outlay cannot be recovered and should not bear on the choice going forward. Arkes and Blumer's 1985 paper The Psychology of Sunk Cost, in Organizational Behavior and Human Decision Processes, gave the effect its name and showed it across many small experiments: people who had paid for a theatre ticket used it in bad weather more often than people who were given the ticket, and people told a project was nearly finished kept funding it. This tradition treats the behaviour as a cognitive bias measured in individuals. It is the same tendency that organizational research relabels as escalating commitment, that economics frames as the breach of a rule saying it should not happen, and that behavioural ecology asks whether animals share.[3][4]

Unit

One person's choice to continue because of unrecoverable past investment

Recovery means

The bias weakens when the prior outlay is reframed as unrecoverable and the choice is posed only in terms of future costs and benefits

Measured by

Choice to continue or abandon an option, compared between conditions that differ only in a prior, non-recoverable cost

In behavioural ecology the same question appears as the Concorde fallacy: whether an animal's choice to keep investing in offspring, a nest, or a territory is driven by what it has already spent rather than by the return it can still expect. Dawkins and Carlisle's 1976 note in Nature, Parental Investment, Mate Desertion and a Fallacy, argued that deciding on the basis of past investment would be an error and that natural selection should not favour it, so animals ought to weigh only future prospects. Arkes and Ayton's 1999 review in Psychological Bulletin gathered the animal and human evidence and asked whether humans are, oddly, less rational than lower animals, since adult animals rarely show the effect while human adults reliably do. This tradition asks where in nature the behaviour occurs, in contrast with the individual bias, the organizational relabel, and the economic rule.[5][6]

Unit

An animal's choice to continue investing in a nest, brood, or territory

Recovery means

Not applicable

Measured by

Tested by whether investment decisions track prior expenditure or only expected future return, in field and comparative studies