sunk cost

(redirected from Sunk costs)
Also found in: Financial.

sunk cost

Managed care
Costs in equipment, reagents and dedicated supplies that have already been incurred, which are not included in future budget or financial considerations. Sunk costs are typically lost when a technology becomes obsolete.

Psychology
A metaphorical term for the regret of having made a particular choice that resulted in a lost opportunity.
Mentioned in ?
References in periodicals archive ?
Firms with financial constraints might rationally react to sunk costs by investing more in a project, rather than less, because the ability to undertake alternative investments declines in the level of sunk costs.
The sunk costs effect is defined as a greater disposition to continue an endeavor once an investment in money, effort or time has been made (ARKES; BLUMER, 1985).
Later academic work, however, pointed out that a market devoid of any sunk costs is rare and paved the way for a long debate over the theoretical contribution of contestability theory and its applicability in deregulation efforts.
The company will repay De Beers CAD59m, representing 49% of an agreed sum of CAD120m in settlement of the company's share of the agreed historic sunk costs.
Secondary issues examined include opportunity costs, sunk costs, the use of progressive levels of critical thinking skills, the application of classroom knowledge to real life situations, and effective communication skills.
Therefore, the decision to terminate a contract or cancel a program should not be driven by sunk costs.
Most commentators agreed that sunk costs were an important component of the industry and this is where real options could offer insights in the application of access charges (ALLEMAN & RAPPOPORT, 2006; PINDYCK, 2004, 2005a).
There are also parallels between how economists should view DIY and how they already view sunk costs.
However, the market realities of capital intensity, sunk costs and economies of network size prevent a realistic entry of a private third player.
By remaining introspective and measuring time spent versus the ROI of every activity in the business, brokers keep their agencies agile without getting attached to inefficient processes and sunk costs.
The study discovered that just a short period of intentional mindfulness nudged people to ignore sunk costs and make wiser decisions.
The sunk cost effect is often seen as an irrational decision-making bias (Navarro and Fantino 2009) because despite prior investments being "sunk" and having no impact on the success of continued investment, these sunk costs continue to impact decision making.