Sunk Costs

Definition

Money already spent that can't be recovered, which rational actors should ignore but never do, leading to terrible business decisions.

Example Usage

We've invested $5M in this failing product line, so we should keep throwing good money after bad to protect the sunk costs.

Origin

Economics terminology from 20th century

Fun Fact

The sunk cost fallacy is why companies often persist with failing projects instead of cutting losses

Source: Corporate finance and economic decision-making terminology

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