Business & economics textbooks warn against committing the Sunk Cost Fallacy: you, rationally, shouldn’t let unrecoverable costs influence your current decisions.

In this paper, I argue that this isn’t, in general, correct. Sometimes it’s perfectly reasonable to wish to carry on with a project because of the resources you’ve already sunk into it.

The reason? Given that we’re social creatures, it’s not at all unreasonable to care about wanting to act in such a way so that a plausible story can be told about you according to which you haven’t suffered, what I will call, diachronic misfortune.

Acting so as to hide that you’ve suffered diachronic misfortune involves striving to make yourself easily understood to others (as well as your future self) while disguising any shortcomings that might damage your reputation as a desirable teammate.

And making yourself easily understood while hiding your flaws will sometimes put pressure on you to honor sunk costs.

See Also:

Caring About Sunk Costs: A Behavioral Solution to Holdup Problems With Small Stakes
The Interpersonal Sunk-Cost Effect
Dollars, Sense, and Sunk Costs: A Life Cycle Model of Resource Allocation Decisions
Factors Affecting Entrapment: Justification Needs, Face Concerns, and Personal Networks
The Moralization of Effort
The Unilateralist’s Curse and the Case for a Principle of Conformity
Why We Fight Over Fiction
Social status and unethical behavior: Two replications of the field studies in Piff et al 2012
Lay economic reasoning: An integrative review and call to action