Mainstream economists (Mankiw, 2004; Frank and Bernanke, 2006) claim that sunk costs are costs that have already been incurred and cannot be recovered. As such they assert that sunk costs are irrelevant costs since they do not change regardless of which action is presently chosen. Therefore, an individual should ignore sunk costs to make a rational choice. However, McAfee, Mialon and Mialon (2010) on the other hand maintain that once all the elements of the decisionmaking environment are taken into account, reacting to sunk costs can often be understood as rational behavior.

How can we reconcile these opposing views on sunk costs?