Understanding a cognitive bias does not make you immune to it.
Researchers at the University of Toronto tested this directly. Participants who correctly defined the sunk cost fallacy and could identify it in hypothetical scenarios showed no statistically significant improvement in avoiding it when real stakes were introduced. Knowledge of the bias and resistance to it are different cognitive processes.
Why this matters for professional decisions
Organisations routinely continue failing projects because of prior investment. The language around these decisions is telling: we have come too far to stop now, we cannot write off everything we have spent. Those phrases signal sunk cost reasoning almost every time they appear.
A technology director at a logistics firm continued a custom software build for 18 months past its original delivery date, spending an additional 340,000 euros, because abandoning it felt like admitting the initial decision was wrong. The project was eventually cancelled. The off-the-shelf alternative they adopted cost 28,000 euros annually.
A practical check that actually works
Ask one question at every project review: if we had not started this, would we choose to begin it today with what we know now? Strip out all prior investment from the answer. If the honest answer is no, the prior investment is irrelevant — it is already gone regardless of what you decide next.
Knowing about sunk costs is not enough. You need a structured moment to apply the question under pressure.