The idea that once a manager makes a large investment,he should not abandon the project is known as the:
A)negative NPV fallacy.
B)abandonment fallacy.
C)sunk cost fallacy.
D)dependence fallacy.

Question

Quizplus · Accepted Answer

The belief that a manager should not abandon a project in which a large investment has already been made, even if the project is no longer viable or profitable, is known as the sunk cost fallacy. Sunk costs refer to costs that have already been incurred and cannot be recovered. Continuing to invest in a project simply because of the sunk costs is not rational, as it does not take into account whether the future benefits of the project will outweigh the future costs. Therefore, it is important for managers to objectively evaluate the current and future profitability of a project before continuing to invest in it, regardless of the amount of money that has already been invested.

The Idea That Once a Manager Makes a Large Investment,he