What is the sunk cost fallacy?

The sunk cost fallacy is a cognitive bias where an individual continues to invest time, money, or effort into a losing proposition simply because they have already incurred costs that cannot be recovered. This bias often makes it difficult to abandon or walk away from the situation, leading to even further losses. In a detailed explanation, Tim Ferriss highlights how this fallacy can affect various aspects of life, from business decisions to personal relationships, and emphasizes the importance of recognizing when to cut losses regardless of past investments 1 2.