It’s Saturday night. You paid $20 for a movie ticket. Thirty minutes in, you realize the movie is terrible. The plot makes no sense, the acting is painful, and you are bored to tears.
Do you leave the theater?
Probably not. You shift in your seat and think, "Well, I’ve already paid $20. I might as well finish it."
Congratulations, you just fell for the Sunk Cost Fallacy.
You justified wasting your time (which is priceless) because you already wasted your money (which is gone). This psychological trap doesn't just ruin movie nights; it bankrupts companies, destroys investment portfolios, and keeps people in unhappy careers for decades.
The most famous example of this phenomenon involves the most beautiful airplane ever built.
The Billion-Dollar Mistake
In the 1960s, the British and French governments teamed up to build the Concorde, a supersonic passenger jet. It was an engineering marvel, capable of flying from London to New York in under three hours. It was supposed to be the future of aviation.
There was just one problem: It was a financial disaster.
Even before the first commercial flight took off, the project was vastly over budget. The engines guzzled fuel at an alarming rate, and the "sonic boom" noise was so loud that the plane was banned from flying over land.
Economically, the project was dead on arrival.
But did they stop? No.
The governments had already poured millions into development. National pride was on the line. The logic was simple but deadly: "We have come this far and spent this much; we can’t turn back now."
They kept the project alive for 27 years, losing money on almost every flight, until it was finally grounded in 2003. This behavior is so classic that economists often rename the Sunk Cost Fallacy to "The Concorde Fallacy."
Why Your Brain Hates Quitting
Why do we do this? Why do we repair a car that costs more to fix than it’s worth? Why do we hold onto a crypto coin that has dropped 80%, hoping it will bounce back?
It comes down to Loss Aversion. Our brains are wired to feel the pain of a loss twice as intensely as the pleasure of a gain. To avoid admitting "I made a mistake" (the loss), we double down. We try to make it work.
But here is the brutal truth of economics: The money you spent is gone. It is sunk. You cannot get it back by spending more. Your decision today should only be based on the future potential, not the past expense.
If you find yourself stuck in a "Concorde" situation—whether it's a bad investment, a failing project, or even a boring book—try using Zero-Based Thinking.
Ask yourself this single question:
"Knowing what I know now, if I hadn't already started this, would I start it today?"
Would you buy that stock today at its current price? Would you buy a ticket to this movie knowing it's bad? Would you start this project from scratch?
If the answer is no, then you must quit. Immediately.
Walking away isn't always failing. Sometimes, quitting is the smartest financial move you can make. Don't let your past steal your future. Cut your losses, leave the movie theater, and go do something you actually enjoy.
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