Why is it a fallacy when it makes so much sense intuitively?
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You’ve already put a lot of money into something that isn’t paying off, so you naturally feel like you need to keep paying for that thing.
Let’s say you’ve been buying lottery tickets under the theory that one will eventually win. But if every payment has an equal chance of yielding nothing, then your previous investments don’t matter. You feel compelled to buy more lottery tickets, because if you stop before you win anything, then all the previous lottery tickets were pointless. But the previous tickets are already pointless. The logical basis for buying more is fallacious.
The sunk-cost fallacy is an illogical basis for decisions, but it acts on everyone at some point. When you sink costs into something, you feel like you have to keep paying until you get what you want. If you stop sinking those costs, then everything you sank earlier was a waste.
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