Which term refers to the tendency to continue investing due to past investments?

• A. Intelligence
• B. Sunk-Cost Fallacy
• C. g Factor (General Intelligence)
• D. Factor Analysis

Answer: (B)

The main idea here is that decisions should be guided by future costs and benefits, not by money already spent. This tendency is called the sunk-cost fallacy: people keep investing in something because of what they’ve already put in, trying to “recover” those past costs even when continuing would not be the rational choice. For example, staying in a project or finishing a movie you’ve already paid for, just to avoid feeling like those expenses were wasted, illustrates this bias. In reality, only future costs and benefits should influence the decision, since past investments are irrecoverable. The other terms relate to different areas—intelligence and general cognitive ability, or a statistical method—rather than a bias about continuing investment based on past spending.