Concorde Fallacy

#ConcordeFallacy

The Concorde Fallacy (also known as the sunk cost fallacy) refers to the logical error of continuing an endeavor solely because of the investment already made, even when future costs outweigh potential benefits.

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Origin of the Term: “Concorde” Case

• Named after the Concorde supersonic jet project jointly developed by Britain and France in the 1960s.

• The Concorde was technologically groundbreaking but economically disastrous—extremely costly, limited demand, and high maintenance.

• Even after it became clear that the project would never be profitable, the governments continued funding it for years.

• Their reasoning: “We’ve already spent so much, we can’t stop now.”

This became a textbook case of irrational economic decision-making.

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Definition

The Concorde Fallacy occurs when a decision is based on past, irrecoverable costs (sunk costs) instead of future costs and benefits.

Rational thinking:

“What’s best moving forward, regardless of what I’ve already spent?”

Concorde Fallacy:

“I’ve already spent so much; I have to keep going or it’ll all be for nothing.”

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Everyday Examples

1. Bad Relationship:

“I’ve been with them 5 years already… I can’t leave now.”

2. Unfinished Book/Movie:

“It’s boring, but I’m already halfway through.”

3. Business Project:

“We’ve invested $2 million already, we can’t stop now—even if it’ll lose more.”

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Why It’s a Fallacy

• Sunk costs are gone—they cannot be recovered.

• Rational decisions should be based only on marginal analysis: “Is continuing worth more than quitting, from now on?”

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Psychological Roots

• Loss aversion: We hate feeling like we wasted something.

• Cognitive dissonance: We try to justify earlier decisions to reduce internal conflict.

• Pride & ego: Admitting failure is hard.

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Related Concepts

• Sunk cost bias – broader term in behavioral economics.

• Escalation of commitment – continuing a failing course of action.

• Opportunity cost – what you forgo by choosing one path over another.

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How to Avoid It

• Ask: “Would I start this now if I hadn’t already spent X?”

• Focus on future payoffs, not past efforts.

• Be willing to cut losses.

• Use outside advisors to reduce emotional bias.

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Let me know if you’d like a visual chart or real-world business case studies that illustrate the Concorde Fallacy further!

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