Week 7: The Sunk Cost Trap
Why "I've Already Started" Is a Dangerous Reason
Last week we felt the pull of loss aversion. This week we meet its close cousin — sunk cost thinking, the voice that says "but I've already started!"
Money, time, or energy you have already spent is gone forever. It should NOT affect what you do next. But our brains hate the feeling of "wasting" a past investment, so we keep going even when stopping would be smarter. This is the sunk cost fallacy, and it trips up everyone — kids, parents, coaches, and even big companies.
This week we feel the pull of sunk costs, learn to name the trap, and practice asking the only question that matters: "What is the best use of my time and resources FROM THIS POINT FORWARD?"
The sunk cost trap is fast brain whispering "don't waste what you spent" before slow brain can ask "is this still worth it going forward?"
- The escalation auction (Session 2) is the highlight of this week. It is dramatic and memorable — let it play out.
- Kids may feel defensive when they recognize sunk costs in their own behavior. Keep it light: "Everybody does this. It's a brain setting, not a character flaw."
- Connect to loss aversion from last week: sunk cost is partly driven by loss aversion (quitting feels like "losing" the investment).
Week at a Glance
| Component | Duration | Format |
|---|---|---|
| Guided Session 1 – The Movie Ticket Problem | ~30 min | Facilitator + student |
| Guided Session 2 – The Escalation Game | ~30 min | Facilitator + student (2+ players ideal) |
| Independent Practice – Sunk Cost Audit | ~20 min | Solo |
- Key Vocabulary: sunk cost, sunk cost fallacy, walk-away point, escalation
- Difficulty: Moderate
- Prep Time: ~10 minutes
Facilitator Preparation
- Prepare a small prize for the escalation auction (a piece of candy, a sticker, a small toy)
- Prepare play money or point tokens for bidding (give each player 10–15 tokens)
- Print or write the scenario cards for Session 1
- Review the student's Decision Journal — look for any entries where sunk cost thinking may have appeared
Quitting is sometimes the smart move. Help the student separate perseverance (the goal still makes sense) from sunk cost thinking (they are only protecting what they've already spent).
For Younger Learners (Ages 8–9)
Simplest version of the concept: "Just because you already started something doesn't mean you have to finish it — especially if it's not working."
What to shorten or skip:
- Focus on the Movie Ticket Problem and 2–3 scenario cards as stories and discussion. These are concrete and accessible.
- Skip the Dollar Auction — it can be abstract for younger learners. Instead, role-play "waiting in a long line for a ride that isn't fun anymore."
- Keep sessions to 20 minutes.
Adapting the activities:
- For the scenario cards, read them aloud and discuss one at a time. Do 2–3 rather than all 5.
- For the "When Continuing IS Right" sort, reduce to 3 pairs and discuss verbally.
- Focus on one walk-away point rather than three.
Journal alternative: "Something I kept doing this week even though I wanted to stop was ___." Spoken or drawn is fine.
What success looks like: The learner can explain, in their own words, that finishing something just because you started isn't always the right call — and can give one example.
- Run the full dollar auction with multiple rounds, varying the prize value.
- Discuss real-world escalation spirals — research a real example (like the Concorde fallacy).
- Challenge: go one full week noticing sunk cost traps and log every instance in the Decision Journal.
Guided Session 1
The Movie Ticket Problem
Learning Goal
By the end of this session, the student can:
- explain the sunk cost fallacy in their own words
- distinguish between good reasons to continue and sunk cost reasons
- apply the "from this point forward" question to a scenario
Activities
1. The Classic Scenario
Present this:
"You paid $15 for a movie ticket. Thirty minutes into the movie, it's terrible. Would you stay and watch the rest, or leave?"
Most people say "stay — I already paid!"
Now reframe:
"Imagine you got the ticket for free. Thirty minutes in, the movie is terrible. Would you stay?"
Most say "of course not — I'd leave!"
Key insight:
"The $15 is gone whether you stay or leave. It's spent. The only question is: do you want to spend the NEXT 90 minutes watching a bad movie, or doing something you'd enjoy more? The ticket price should change nothing about that decision."
Connection to opportunity cost:
"The sunk cost trap works because we fail to see the opportunity cost of continuing. The time and energy you spend finishing a bad movie is time and energy you can't use on something better. Every minute stuck in a bad choice is a minute stolen from a good one."
2. Scenario Cards
Read each scenario and ask: "Is this person falling into the sunk cost trap? What should they do?"
- The LEGO Set: "I've been building this LEGO set for 3 hours but I realized I don't like how it looks. Should I finish it just because I started?"
- The Book: "I'm 100 pages into a 300-page book and it's boring. But I've already read 100 pages…"
- The Sport: "I've played soccer for 2 years but I really want to try swimming. Mom says I should stick with soccer because of the 2 years of practice."
- The Video Game: "I've been trying to beat this level for an hour. I'm not having fun but I don't want to 'waste' the hour I already spent."
- The Food: "I ordered a huge meal and I'm full. Should I keep eating because I paid for it?"
For each one, practice asking the magic question:
"Forget everything I've already spent. From this moment forward, what's the best choice?"
3. When Continuing IS Right
Important nuance: not every "I want to quit" moment is sunk cost. Sometimes continuing IS the right call.
Sort together:
| Good Reason to Continue | Sunk Cost Reason |
|---|---|
| "I still believe this will work" | "I've already put so much time in" |
| "The hard part is almost over" | "It would be a waste to quit now" |
| "I'm learning, even if it's hard" | "I can't let that effort go to waste" |
| "This still matches my goal" | "I'd feel bad about the money I spent" |
Discuss: "The difference is whether your reason looks FORWARD (toward the goal) or BACKWARD (toward what you already spent)."
Guided Session 2
The Escalation Game
Learning Goal
By the end of this session, the student can:
- experience the pull of escalating commitment first-hand
- explain why auctions and competitions trigger sunk cost thinking
- describe the "escalation spiral" and how to break out of it
Activities
1. The Dollar Auction
This classic game demonstrates sunk costs dramatically. You need 2+ players (you and the student, or with siblings/friends).
Rules:
- You are auctioning a small prize (worth about 5 tokens).
- Players bid with their tokens, starting at 1.
- The twist: the SECOND-highest bidder also pays their bid but gets NOTHING.
Play it out:
- Someone bids 1 token.
- Someone bids 2 tokens (the prize is still "worth it").
- Player 1 has a choice: bid 3, or lose the 1 token they already bid.
- Most players keep bidding to avoid "losing" what they've already bid.
- Often the bidding goes PAST the value of the prize. Both players end up paying more than the prize is worth!
If only one learner + one facilitator: The facilitator plays against the learner in the Dollar Auction. The dynamic works just as well with two people.
If no auction is possible: Replace with a discussion-based version. Present this scenario: "You've been waiting in line for 20 minutes. The sign says 30 more minutes. You're not even sure the ride is fun. Do you stay in line?" Walk through the sunk cost reasoning together.
Debrief:
"What happened? Why did you keep bidding even when the price got too high?"
Common answer: "Because I'd already bid X and I didn't want to lose it."
"That's the sunk cost trap in real time! The tokens you already bid are GONE. The only question is: is the NEXT token worth spending? Once the bid exceeds what the prize is worth, the answer is always no — no matter how much you've already bid."
2. Real-World Escalation Spirals
Discuss examples of escalation in real life:
- Video games: Spending real money on in-game currency, then spending more to "protect" the purchase
- Arguments: Continuing to argue just because you've been arguing for 20 minutes
- Projects: A company keeps pouring money into a failing project because "we've invested too much to stop"
- Waiting in line: You've waited 30 minutes for a ride. The sign says 45 more minutes. Do you stay because of the 30 you already waited?
For each: "What would you advise? How do you break the spiral?"
Answer: Set a quit point IN ADVANCE. Before you start, decide the maximum you're willing to invest. When you hit it, stop — no matter what.
3. The Pre-Commitment Strategy
Introduce the tool for beating sunk costs:
"Before you start something, set a 'walk-away point.' Write it down. When you reach it, follow through — even if it feels uncomfortable."
Practice:
- "I'll read 50 pages. If I don't want to keep going, I'll stop — guilt-free."
- "I'll try this game for 15 minutes. If it's not fun, I'll switch."
- "I'll spend $5 on this. If I need more, I'll stop and think about whether it's worth it."
Independent Practice
Goal
Recognize sunk cost thinking in your own life and practice the "from this point forward" question.
Activities
1. The Sunk Cost Audit
Look around your room, your schedule, and your habits. Find at least one thing you're still doing mainly because of what you've already invested (not because you still enjoy it or it still serves your goals). Write about it:
- What is it?
- How much time/money/energy have you put in?
- If you had NOT already invested anything, would you start it today?
- What would you do with the time/energy if you stopped?
Minimum viable version (younger learners): Think of ONE thing you kept doing this week even though you wanted to stop. Tell a grown-up: "I kept ___ because I already ___. But really, I should have ___."
2. Set Three Walk-Away Points
For three things you're starting or continuing this week, set a specific walk-away point in advance. Write them in your Decision Journal.
Decision Journal
Write about something you kept doing mainly because you'd "already started." Knowing what you know now, was continuing the right call? Use the forward-looking question: "From that point, was there a better use of my time?"
Reflection Questions
- Why does "I've already invested so much" feel like such a strong argument, even when it shouldn't be?
- Is there a difference between "not giving up" and "falling for sunk costs"? How do you tell which is which?
- Can you think of an adult in your life who might be stuck in a sunk cost trap?
Quick Mastery Check
After this week, check whether the learner can:
- Apply the magic question: Present a scenario: "You've been reading a book for an hour and you hate it. Should you finish it because you already read this much?" (Looking for: "No — the hour is already gone. The question is whether the REST of the book is worth reading.")
- Distinguish sunk cost from perseverance: "What's the difference between 'not giving up' and 'sunk cost'?" (Looking for: something about whether the REASON is forward-looking or backward-looking.)
- Name a walk-away point: "Can you set a walk-away point for something you're doing this week?" (Any specific example counts.)
If the learner can apply the "from this point forward" question, they're ready for Week 8.
Pause and Notice
After the Movie Ticket Problem or scenario cards, ask:
"When you think about quitting something you've put time into, what emotion comes up? Guilt? Embarrassment? Worry about what others will think?"
"Sometimes we keep going not because it makes sense, but because quitting feels like admitting we were wrong. That's a feeling, not a fact."
Sunk cost thinking is powered by emotions — the discomfort of "wasting" effort, the fear of looking foolish, the loyalty to a past version of yourself who made a different choice. Recognizing those feelings helps you ask the real question: "Is this still worth it going forward?"
This week's takeaway: Quitting isn't failure when the reason to continue has disappeared. The bravest choice is sometimes to stop.
Spiral Review
- From Week 5: "Sunk cost thinking is a fast-brain shortcut. Your brain whispers 'don't waste what you spent!' before slow brain can ask 'is this still worth it?'"
- From Week 6: "Sunk cost is closely related to loss aversion. Quitting FEELS like losing the investment — and we know losses feel 2× worse than gains."
- From Week 2: "Put the sunk cost decision on the 2×2 grid. If you kept going and it worked out, was that good process or just luck?"
- Use only 2–3 scenario cards and discuss them as stories rather than exercises.
- Skip the dollar auction; instead, role-play the "waiting in a long line" scenario together.
- Focus on one walk-away point rather than three.
- Run the full dollar auction with multiple rounds, varying the prize value.
- Research a real-world escalation spiral (e.g., the Concorde fallacy) and present findings.
- Challenge: go one full week noticing sunk cost traps and log every instance in the Decision Journal.
Solo-friendly note: This week's Independent Practice works well solo. The Sunk Cost Audit and walk-away points are personal reflection activities that don't require a partner.