Sunk cost
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A sunk cost is the resources (such as money and manpower) that have been expended on a project and that cannot be recovered. In analyses of failed or failing projects, a common practice is to justify the continued allocation of financial or other resources (resources that might be effectively used elsewhere) in the hopes that previous unfruitful investments may be recouped. This is most easily understood as "throwing good money after bad."
Ignoring sunk costs and making decisions based on an analysis of likely future expenditures and potential successes will generally save money and resources in the long term by avoiding any additional expenditure on a project that is doomed to failure.
Arguments based on the need to justify sunk costs have been deployed in scientific and political circles, generally in circumstances where a group of true believers has already lost the debate but continues to seek funding in an attempt to pull something, or even anything, out of a failed project.The desire to continue the work of Pons and Fleischmann on cold fusion, long after it was discredited, is one prominent example.
A more emotive form of this reasoning figured strongly in American rhetoric on the war on terror, which often framed any proposed drawback from Iraq or Afghanistan as dishonoring the memory of the soldiers who had died in those countries.
In international relations, the term is used to describe resources that a state has put an area in an effort to show a serious commitment. The permanent military infrastructure that the United States has built in South Korea is a sunk cost designed to show North Korea that the US firmly committed to ensuring the region's stability.[1]
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[edit] Footnotes
- ↑ Thomas Schelling, Strategy of Conflict