:: COMPARE ::
The short answer
Loss aversion is why quitting hurts — you feel the write-off as a loss. The sunk cost fallacy is what you then do about it: keep spending to postpone booking that loss. One is the engine, the other is the behaviour it drives.
Side by side
| Aspect | Sunk cost fallacy | Loss aversion |
|---|---|---|
| Is | A behaviour | A feeling |
| Looks | Backward | At the reference point |
| Produces | Continued spending | Reluctance to realise |
| Named | 1985 | 1979 |
What each one means
The sunk cost fallacy is the pull to keep spending money, time or effort on something because of what you've already put in — even when none of it can be recovered and stopping would leave you better off.
Full definition of Sunk Cost Fallacy →Loss aversion is the principle that losing something hurts more than gaining the same thing feels good — so we fight harder to avoid losses than to win equivalent gains.
Full definition of Loss Aversion →