Judgment in Managerial Decision Making, 8th Edition

CHAPTER SEVEN

The Escalation of Commitment

If at first you don't succeed, try, try, again. Then quit. No use being a damn fool about it.

—W. C. Fields

In the previous chapters, we examined single decisions and the ways in which judgmental and motivational biases and the framing of information can influence our responses to them. However, many critical managerial decisions concern a series of choices rather than an isolated decision. We are prone to a particular type of bias when approaching decisions serially—namely, a tendency to escalate commitment to our initial decision. This chapter opens with an explanation of the individual tendency to escalate commitment. In the second section, we show how a competitive environment increases the tendency to escalate commitment. The third section provides a taxonomy of explanations for the psychological tendency to escalate and offers recommendations for eliminating nonrational escalation behavior.

Consider the following examples of situations that invite escalation:

• You personally decided to hire a new manager to work for you. Although you had expected excellent achievement, early reports suggest that she is not performing as you had hoped. Should you fire her? You have invested a fair amount of time and money in her training, and you wonder if she's just in the process of learning the ropes. You decide to invest in her success a bit longer and provide additional resources to help her achieve. Two months later, her performance is still ...