The sunk-cost fallacy looks backward at money already spent; opportunity cost looks forward at the best thing you'd give up. One is a trap to ignore; the other is a tool to use.
| The sunk cost fallacy | Opportunity cost | |
|---|---|---|
| What it is | A bias: continuing because of what you've already spent | A principle: the value of the next-best option you forgo |
| Direction | Backward — at past, unrecoverable costs | Forward — at future trade-offs |
| The takeaway | Ignore it — what's spent shouldn't drive the choice | Use it — weigh what you're really giving up |
If you're staying in something only because you've already invested, that's the sunk-cost fallacy — ignore it. If you're choosing between options, weigh the opportunity cost — what the best alternative would have given you. Sunk cost is the trap; opportunity cost is how you avoid it.
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