The money lost is gone whether you hold or sell. The only question is whether the position is a good use of the capital from here. Sunk-cost thinking turns a 1R loss into a bagholder position.
Averaging down into a loser is often sunk-cost reasoning with extra risk attached.
Example: a trader is down $2,000 on a stock and refuses to sell because that would make the loss real. It falls another $3,000. The first $2,000 was already real.
Related: loss-aversion, disposition-effect, bagholder, stop-loss