Final answer:
Irrelevant costs like sunk costs challenge individuals and firms because they require acknowledging past mistakes and focusing on future potential, despite prior investments.
Step-by-step explanation:
Irrelevant costs, particularly sunk costs, are hard to ignore because they often represent substantial investments that do not influence future decisions.
Admitting an earlier error in judgment and the associated psychological discomfort is a significant reason for this difficulty. For instance, firms struggle to discontinue a failing product after investing heavily in its development and launch. The logical approach is to disregard these sunk costs and focus decisions on future potential.