Role of sunk cost in decision making

A sunk cost is a payment that can't be recovered; it's already been done and its not refundable. They're irrelevant in making decisions about future actions for that reason; whether you want to or not, you can't reverse that cost.

For example, when a car is purchased, it can subsequently be resold; however, it will probably not be resold for the original purchase price.

 

regards,

The sunk cost is the cost which does not affect our decision regarding (1) to do work or not to do and (2) if we do, which alternative should we select among the alternative available. Means the cost which always occur either you accept offer or not, is sunk cost. E.g. Depreciation, factory rent, manager's salary etc. If u do not accept the offer then also this will occur or you accept then also this would occur, so it has no relevance in decision making.