Rational choice theory treats sunk costs as irrelevant to future decisions

Evidence

Sunk cost, however, has its own ambiguity. As we can learn from microeconomics, sunk costs are only a psychological outcome of imagination; from a rational choice point of view (e.g., Pindyck & Rubinfeld, 2005), they are irrelevant. Organizations could ignore them because they are, in fact, not relevant for their future decisions. If there are new and better projects, the capital market will provide fresh money to overcome the old structure. — Jörg Sydow, Georg Schreyögg, and Jochen Koch, Organizational Path Dependence, 61

Categorization

• QUESTION: Is the claim that capital markets fund better projects regardless of sunk structure actually defensible empirically?
• DEEPTHINKING: The tension between psychological sunk cost and rational irrelevance is a durable knot worth sitting with.
• XREF: connects to: Intentionality is irrelevant to the constraining force of past decisions. — Daryl Levinson and Benjamin I. Sachs, Political Entrenchment and Public Law, 491