Sunk cost bias is one the concepts presented in the World Development Report 2015: Mind, Society and Behaviour. Since I assume many of you do not have the time or the energy to read that report, I will try to give you an apprehensible explanation; and some reasons for why you should know.
In an aid context, sunk cost is when you persist with a project, despite its obvious flaws or absence of results. You, your office or your organization have invested so much money and effort into it that is hard to admit your failures. And the more you have invested, and the more you have lost, the more likely you are to head on; despite knowing that the project is beyond rescue.
Why do we humans do such a thing? Looking at it from the outside it seems rather stupid, to say the least. Especially if we claim ourselves to be well educated and “rational”? [Read more…]