Evaluating
Sunk Cost Fallacy
We continue investing in something because of past investments, even when future outcomes suggest it’s irrational. Eventually, this leads to dissatisfactory outcomes & failed expectations.
For Example
A well-known example of the sunk cost fallacy, often referred to as the "Concorde Fallacy," involves the joint investment by the French and British governments in the Concorde supersonic aircraft. Despite escalating costs and clear indications that the project would not be financially viable, both governments continued to invest in it. The Concorde operated for 30 years but never recouped the extensive expenditures, resulting in significant financial losses.
Similar Biases
Similar biases: Commitment Bias, Status Quo Bias, Escalation of Commitment. Opposing biases: Opportunity Cost Awareness, Rational Choice Theory, Strategic Abandonment
We tend to remember tasks and goals that are not completed.
The Sunk Cost Fallacy is a cognitive bias that causes individuals to continue an endeavor, project, or relationship solely because they have already invested resources—whether time, money, or effort—into it, regardless of whether the current path remains beneficial. Rather than making rational decisions based on future value, people and organizations often irrationally escalate their commitment to avoid feeling like past investments were wasted. This bias is driven by emotional attachment, loss aversion, and the human tendency to justify decisions post hoc. In the context of Customer Experience, the Sunk Cost Fallacy plays out when customers stick with subscription services, apps, or product ecosystems even when they no longer serve them well—simply because they’ve already “put so much into it.” Brands that recognize this can design experiences that either ethically encourage continued value extraction or help customers pivot with grace, maintaining trust and loyalty. The key lies in knowing when to reinforce engagement and when to release attachment.
The Impact of Discount Offers on Theatre Attendance: A Study on Season Ticket Holders
Researchers observed 3 groups who had the intention to buy season tickets for the theatre. The first group was offered no discount and paid the full $15 for their ticket. The second who already had the intention of buying a season tickets was offered a $2 discount and the third group was offered a $7 discount. Results showed that group 1 attended an average of 4.11 shows, group 2 attended an average of 3.32 shows and group 3 attended an average of 3.29 shows.
The Sunk Cost Fallacy in Ski Trip Decision Making: An Experiment by Arkes and Blumer
In an experiment by Arkes and Blumer, participants imagined purchasing a $100 ski trip to Michigan and a $50 ski trip to Wisconsin, later discovering both trips were non-refundable and scheduled for the same weekend. Despite being told they would enjoy the Wisconsin trip more, 54% chose the Michigan trip. This decision was attributed to the sunk cost fallacy, where individuals irrationally persist with an option due to prior investments, disregarding future benefits.
Transaction Decoupling: How Price Bundling Affects the Decision to Consume
This series of studies focused on how price, customization effort, and bundling affected consumers’ willingness to switch or abandon products. One notable version asked participants to imagine they had invested significant time customizing a product (e.g., building a digital profile or configuring an online planner) — and then were introduced to a new, objectively better version that didn’t carry over any data. Results showed that participants who had invested effort into customizing were significantly more reluctant to switch, even when the benefit of switching was clear. Customization creates emotional and cognitive investment. In subscription models, learning platforms, and productivity tools, this is especially powerful. Customers won’t easily move away from what they’ve built — even when something better exists. That means effort itself becomes a barrier to churn.
Need
Seed Emotional Investment by Making the Cost Visible
The Sunk Cost Fallacy doesn't wait until a transaction — it can begin even in the need recognition stage, especially when the brand positions past actions or missed opportunities as “investments already made.” A fitness app might open with a message like, “You've already tried 3 programs—this time, make it count.” Even if the person wasn’t using your service, referencing past behaviors that suggest sunk effort helps activate emotional resonance and create urgency. Emotional inertia builds early when people reflect on time already “wasted” and now feel compelled to justify it with a better choice. Brands can harness this by framing their offer as the redemption path — turning previous waste into forward motion.
Awareness
Highlight Relevance by Reflecting Past Efforts
In the awareness stage, surfacing familiar problems and showing how your product gives prior efforts new value can activate this bias. For instance, an online course platform might advertise “Don't let your past courses go unused—connect and build on them here.” That message tells the customer, “Your investment wasn’t lost — it can continue.” Awareness-stage content that references common user frustrations or time already spent looking for solutions subtly invokes the Sunk Cost Fallacy to boost relevance. In CX terms, it's not about pushing the product directly; it’s about aligning emotionally with what customers have already tried and endured — making your solution feel like a continuation, not a restart.
Consideration
Reinforce Progress and Commitment with Visualized Investment
At the consideration stage, people weigh pros and cons—but emotional weight carries surprising influence. Showing customers what they’ve already done is a powerful nudge. For example, travel booking platforms that say “You've viewed this destination 4 times this week” subtly suggest investment. Product configurators that save choices and progress ("You're 70% through building your dream PC") reinforce effort already spent. These tactics activate the desire not to “waste” what’s been done. In Customer Experience, this reduces friction and accelerates decisions. When the customer sees how much effort has already gone in, abandoning the path feels like losing something—even when no real cost exists.
Exploration
Create Ownership by Encouraging Customization and Micro-Investment
As customers begin to explore more deeply, encourage personalization and light interaction early. Every bit of time or attention they give—clicking, filtering, favoriting—creates tiny emotional hooks that make walking away harder. Behavioral science shows that the more customers “shape” a solution to fit their needs (even just visually or in filters), the more they feel attached. This is why free tools that require input (style quizzes, space planners, interactive demos) work so well: they create micro-investments. In exploration, CX teams should design experiences that feel easy, yet personally involving—because even 10 minutes spent engaging can create a loyalty anchor, thanks to this fallacy.
Research
Reframe Options in Terms of “Don’t Lose What You’ve Built”
During research, customers are comparing multiple brands. Sunk Cost Fallacy plays out when you remind them—subtly—of what they’ve already invested with you. Think about a SaaS platform that says, “You’ve built your workflow here—do you really want to start over?” Or a learning app that says, “All your data is here. Switching means losing progress.” These aren’t threats—they’re reminders that the value is already growing. Even free trials can trigger this bias if users are shown milestones (“You’ve already created 3 templates—don’t lose them!”). Smart CX design makes the current platform feel like the result of the customer’s effort—not just the brand’s features.
Selection
Use Prior Interactions to Justify the Final Decision
In the selection stage, your biggest competitor is inertia. The Sunk Cost Fallacy reinforces the idea that the decision is already partly made—because the customer has done the “hard part.” Use messaging like, “You’ve already made the right choice—now lock it in,” or visuals that show all the steps completed so far. Even if no transaction has happened yet, building up perceived effort (“You've compared plans, selected preferences, and built your profile”) makes abandoning the decision feel like a loss. This tactic is used well in subscription sites, especially with savings calculators or configuration steps. Good CX here focuses on reinforcing justification—letting the user rationalize why sticking with this choice honors their time and energy.
Purchase
Celebrate Completion and Justify Past Effort Emotionally
The purchase moment is emotional, not just transactional. You can enhance satisfaction by making the moment feel like a natural and justified result of prior work. For instance, “You made it. All your effort led to this moment” gives the customer psychological closure and pride. Brands can even reinforce milestones (“You saved 3 hours of planning by choosing us!”) to let the customer feel their effort wasn’t wasted. The psychology here is clear: if the journey felt like a build-up, the purchase becomes the climax. In CX, this tactic helps reduce buyer’s remorse and increases emotional resonance by giving purpose to the effort invested.
Post Purchase
Anchor Loyalty in Time, History, and Ongoing Value
After the transaction, sunk cost becomes an asset if you design post-purchase interactions to remind users of their history and progress. For instance, loyalty programs that show “You’re 45 points from Platinum” make it harder to leave. Emails like “Look what you've accomplished in just 3 months” reinforce value. Even nudges like “Don’t let your plan go to waste—book now!” help people justify continuing. In subscription-based businesses, this is critical. CX leaders should build dashboards, history views, and personalized messages that transform time spent into visible value. The more your platform reflects the customer’s past, the more likely they are to stick with it—not always rationally, but powerfully.
Customer Experience Challenges
Typical challenges in CX where the bias can be used
- Control: When customers feel they’ve already invested time or money, they feel more in control of their outcome. Highlighting previous investment gives them a sense of agency over their decisions.
- Confidence: The fallacy can increase a customer's belief in their current path—especially when reinforced by personalized confirmation. Brands can build confidence by validating past actions and showing how close the customer is to completing something valuable.
- Motivation: By showing that progress has already been made, customers feel a psychological push to continue. It becomes easier to motivate action when abandoning it feels like wasting prior effort.
- Memory: Customers recall experiences where they’ve invested the most effort or money—regardless of outcome. CX teams can use this by reminding them of their journey, tapping into emotional memory to drive retention.
- Selection: When customers are overwhelmed by options, the fallacy helps by making one option feel “already chosen” due to prior interaction or effort, narrowing the field through emotional logic.
- Information: Customers are more likely to favor platforms where they’ve already “learned the ropes.” The cost of switching information contexts becomes a hidden barrier that CX design can tactfully exploit or alleviate.
Customer Experience Pillars
Renascence CX pillars where it can be applied most efficiently
- Integrity: Misuse of this bias can cause errors in decision making, leading to dissatisfaction and negative feelings toward the brand. If customers feel trapped by their prior investment, trust can erode quickly.
- Expectations: When effort is rewarded with visible progress or rewards, it strengthens positive expectations of future value—keeping customers engaged.
- Resolution: Progress-based messaging (“You’re almost done”) taps into the desire for closure, helping resolve journeys and reduce abandonment.
- Effort: Ironically, the more effort someone puts in, the harder it is to let go. CX can use this by designing small, continuous engagement steps that feel valuable to complete.
- Convenience: When switching becomes inconvenient, customers justify staying by referencing past effort. Brands can lean into this subtly, or reduce resistance when onboarding new users by minimizing sunk cost from previous experiences.
Customer Experience Interfaces
Interfaces & touchpoints where it can be applied most efficiently
- Digital: Long-term use data, streaks, or time-based achievements in apps reinforce perceived investment. Highlighting “You’ve been with us for 2 years” strengthens commitment and reduces churn.
- Product: Physical or digital products that require setup, personalization, or skill-building (like DIY kits or complex platforms) create ownership through effort, tying customers to the brand emotionally and cognitively.
- 121: Customer service reps who reference the customer's history (“You've already completed most of your onboarding—want to finish it?”) amplify sunk cost effects, encouraging completion and reducing drop-off.
- Purchase: Showing past order history during checkout reminds users of their long-term relationship and the value they’ve already committed, increasing the likelihood of repeat purchases.
- Promo: Retention offers like “You’re already halfway to Gold status” or “Only $12 more to unlock next month’s perks” rely on the fallacy by appealing to what has already been invested.
Renascence Tip
When leveraging the Sunk Cost Fallacy in Customer Experience, it's critical to walk the line between loyalty-building and manipulation. On one hand, reminding customers of their previous investments—time, money, effort—can increase engagement, drive completion, and reduce churn. It's why loyalty programs thrive on progress bars and why onboarding flows show “80% completed.” However, ethical concerns arise when customers are nudged to continue with a service or subscription that no longer serves them well. Brands that misuse this fallacy may enjoy short-term retention but at the cost of long-term trust. The most sustainable approach is to pair commitment reinforcement with fresh, real value—ensuring that continued investment feels empowering, not obligatory. Show customers what they’ve built, but always give them the freedom to leave without guilt.
