Sunk cost什麼意思

"Sunk cost" is an economic term that refers to a cost that has already been incurred and cannot be recovered, regardless of whether the ongoing project is successful or not. In other words, it is a cost that has been paid but cannot be reversed.

For example, if a company invests $100,000 in a new product line and then decides to discontinue the product, the $100,000 investment is a sunk cost because it cannot be recovered. The company cannot recoup the $100,000 by stopping the project; it is already spent and lost.

Sunk costs are a type of historical cost and are considered to be irrelevant when making decisions about future actions, according to the concept of rationality in economics. This is because they cannot be changed and do not affect the potential costs and benefits of future decisions. However, people often take sunk costs into consideration when making decisions, which can lead to irrational decisions.