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Which bias involves continuing to invest based on past (irrecoverable) investments?

1. Confirmation Bias
2. Anchoring Bias
3. Sunk Cost Fallacy
4. Overconfidence Bias

Correct answer: Sunk Cost Fallacy

Solution

The Sunk Cost Fallacy is the tendency to continue investing in something because of past (unrecoverable) costs rather than future value. It's irrational since past costs should be irrelevant to current decision-making.

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