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The Sunk Cost Effect shows the tendency we have to continue on in vain with a project or plans for which we have already invested money, time or effort, even if we no longer want to or there may be more potential losses to come.

Studies have shown that we are more inclined to commit to doing something we don’t want to if we’ve already paid for it. This is because we take the money already “lost” into account – not thinking rationally about the fact that this money is completely irretrievable and therefore a moot point that shouldn’t be part of our decision-making process.

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