Sunk cost refers to the cost that cannot be changed by any decision made now or in the future because the decision made in the past has already occurred. From a rational point of view, sunk costs should not affect our decision-making. However, we often make a lot of irrational decision-making behaviors because we want to recover or avoid sunk costs. This is called the sunk cost effect.
According to the above definition, Xiao Ming lending his friend 10,000 yuan a year ago and deciding not to let his friend repay the money is not a sunk cost effect.