Decision-Making Pitfall 2: Escalation of Commitment

It would seem that one remedy for groupthink would be clear feedback as to the effectiveness of the decision-making process. For example, the Coca-Cola Company's decision to introduce New Coke was eventually recognized as a mistake and reversed. Do such clear failures prompt teams to revisit their decision-making process and improve upon it? Not necessarily. In fact, under some conditions, teams will persist with a losing course of action, even in the face of clear evidence to the contrary. This type of situation is known as the escalation of commitment phenomenon.

Consider the decision-making problem in Box 6-2.

Box 6-2 New-Product Investment Decision

As the president of an airline company, ...

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