How can you avoid the sunk cost fallacy?

What the trap looks like

Arkes and Blumer described a greater tendency to continue after investing money, effort or time. Their field and questionnaire studies examined the wish not to appear wasteful.¹

Chapter 3 concerns bugs in our thinking. My warning sign is a reason stated entirely in the past: 'we have already spent too much to stop'. That explains discomfort, not why the next step is worth taking.

Stopping has costs too

Do not cancel everything that becomes difficult. Ending a contract, course or project may create future costs and obligations. Include them. Exclude only genuinely unrecoverable spending.

Ask someone not invested in the first choice to examine the forward-looking case. Which option is better now, rather than which makes the first decision look less embarrassing?

Is persistence always a sunk cost mistake?

No. Continue if the future case is good. The mistake is letting irrecoverable past investment make that case look better than it is. The research describes a tendency, not a verdict on every difficult project.¹