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Research on the sunk-cost fallacy shows it is driven not by faulty logic alone, but by negative emotional reactions to the decision to withdraw from an investment. In a series of four studies, Dijkstra & Hong (2019) demonstrated that when people face a sunk-cost scenario—a situation where they have already invested money, time, or effort into something no longer worth continuing—they experience negative integral affect: a feeling of loss or distress directly tied to the decision context itself. The research reveals a crucial mechanism: participants who experienced stronger negative emotional responses to sunk-cost scenarios were more likely to continue investing. In contrast, when participants were asked to justify their decision—to think explicitly about reasons for their choice—they experienced less negative affect and became more resistant to the sunk-cost fallacy. The relationship between affective reaction and the sunk-cost tendency was even stronger when participants were under high cognitive load, suggesting that emotion becomes the dominant driver of decision-making when conscious deliberation is limited. The findings suggest that the sunk-cost fallacy persists not because people fail to think rationally, but because the feeling of withdrawal—the prospect of loss—creates emotional pressure to continue the investment. Creating psychological distance (justification, explicit reasoning) dampens this affective reaction and allows for clearer judgment. Without that distance, the negative emotional signal overwhelms the rational evaluation of future costs and benefits.
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