[coliveira]

The answer is the sunken cost fallacy. A government institution will view the sunken cost as too big, and solve that problem by throwing more money at it. The same thing that happens in Wall Street when they get into big problems.

[perl4ever]

Without actual knowledge, I'm certain your analysis is wrong, because it's too anthropomorphic. An institution isn't a person, and isn't subject to common fallacies, for better or for worse. Even if it appears to do things wrong that a person would do, the reasons aren't the same. You may say that there is a boss who is in control and to whom the explanation applies, but institutions don't work like that - they would never last if the leaders completely controlled them.

[scarejunba]

Organizations are even more susceptible to making poor decisions because they don't have information about the other participants. Take, for instance, a choice you and I have to make and where the best choice is either the one that gets you all the benefit or one that gets me all the benefit. e.g. a project that could be done by either of our teams. Instead of doing it that way, we will both choose the third (and worst) option: both our teams do the work and split the work and coordinate in meetings. This way we both get credit. This way the organization gets the worst possible outcome.

Now take the same thing but reward any attackable situation. What you get if you cancel the big losing project: You just threw out $100 million of work. The first mistake you make, I will capitalize on that to say why I should be director instead.