Sunk Cost and Loss Aversion: Why We Hold On Too Long

Studies show we feel financial losses about twice as strongly as gains. So why do smart people keep funding apps no one downloads, or stay in jobs they quietly hate? In this episode, we’ll explore why “walking away” can feel more dangerous than slowly sinking.

Kahneman once wrote that “organisations are factories for sunk costs.” It’s not just about money; it’s your late nights at a failing startup, the years in a degree you no longer want, the campaign your team keeps tweaking even though the audience has moved on. Our brains quietly convert “effort already spent” into “reasons to keep going,” even when the world is clearly giving us new information.

You’ve likely felt it outside of finances: staying in a committee role you dislike because you “owe it” to the group, or clinging to a strategy in activism or politics because you’ve publicly defended it. In each case, the past tugs hard on the steering wheel. In this episode, we’ll look at how sunk cost and loss aversion combine to trap not just individuals, but entire institutions—and how simple, pre-committed exit rules can turn painful U‑turns into normal course corrections.