Escalation of commitment
Escalation of commitment is a pattern of decision-making in which individuals or groups continue to invest in a chosen course of action despite mounting evidence that the decision is wrong or that the project is unlikely to succeed. The phenomenon has been studied in organizational behavior, economics, psychology, and sociology. It commonly arises after substantial resources—such as time, money, effort, or reputation—have been invested, and is often described in the research literature as "irrational" because it violates standard cost–benefit reasoning and persists even when superior alternatives are available.
Economists and behavioral scientists use the related term sunk-cost fallacy to describe situations in which past, irrecoverable investments are used to justify further investment of money, time, or effort, even when new evidence suggests that continuing will yield worse outcomes than changing course.
In sociology and social psychology, similar patterns are sometimes called irrational escalation of commitment or commitment bias. The underlying idea is captured in expressions such as "If you find yourself in a hole, stop digging" and the warning against "throwing good money after bad". Researchers have also examined the opposite process, de-escalation of commitment, which concerns how individuals and organizations reduce or withdraw support from failing courses of action.
Early use
Escalation of commitment was first described by Barry M. Staw in his 1976 paper, "Knee deep in the big muddy: A study of escalating commitment to a chosen course of action".Researchers, inspired by the work of Staw, conducted studies that tested factors, situations and causes of escalation of commitment. The research introduced other analyses of situations and how people approach problems and make decisions. Some of the earliest work stemmed from events in which this phenomenon had an effect and help explain the phenomenon.
Research and analysis
Over the past few decades, researchers have followed and analyzed many examples of the escalation of commitment to a situation. The heightened situations are explained in three elements. Firstly, a situation has a costly amount of resources such as time, money and people invested in the project. Next, past behavior leads up to an apex in time where the project has not met expectations or could be in a cautious state of decline. Lastly, these problems all force a decision-maker to make choices that include the options of continuing to pursue a project until completion by adding additional costs, or canceling the project altogether.Researchers have also developed an argument regarding how escalation of commitment is observed in two different categories. Many researchers believe that the need to escalate resources is linked to expectancy theory. "According to such a viewpoint, decision makers assess the probability that additional resource allocations will lead to goal attainment, as well as the value of goal attainment, and thereby generate a subjective expected utility associated with the decision to allocate additional resources." The next phase of the escalation process is self-justification and rationalizing if the decision the leader made used resources well, if the resources being used were used to make positive change, and assuring themselves that the decision they chose was right. Leaders must balance costs and benefits of any problem to produce a final decision. What matters most often in assuring the leader that they made the right choice regardless of the outcome is if their decision is what others believed in.
Research conducted on the topic has been taken from many other forms and theories of psychology. Many believe that what researchers have done thus far to explain this behavior is best analyzed and tested through situational development and resource allocation.
Other research has identified circumstances that lead to the opposite of escalation of commitment, namely deescalation of commitment. This research explains the factors that influence whether escalation or deescalation of commitment is more likely to occur through the role of budgeting and mental accounting.
Vietnam War
Escalation of commitment can many times cause behavior change by means of locking into resources. In 1965, U.S. diplomat George Ball wrote to President Lyndon Johnson explaining that the South Vietnamese were losing the war, facing the United States with a decision between limiting U.S. liabilities by finding a way out at minimal long-term costs or, alternatively, accepting an open-ended commitment of U.S. forces:Theories
Self-justification theory
thought process is a part of commitment decisions of leaders and managers of a group and can therefore cause a rise in commitment levels. This attitude provides "one explanation for why people escalate commitment to their past investments." Managers make decisions that reflect previous behavior. Managers tend to recall and follow information that is aligned to their behavior to create consistency for their current and future decisions. If a group member or outside party recognizes inconsistent decision making, this can alter the leadership role of the manager. Managers have external influence from society, peers, and authority, which can significantly alter a manager's perception on what factors realistically matter when making decisions.Prospect theory
helps to describe the natural reactions and processes involved in making a decision in a risk-taking situation. Prospect theory makes the argument for how levels of wealth, whether that is people, money, or time, affect how a decision is made. Researchers were particularly interested in how one perceives a situation based on costs and benefits. The framing to how the problem is introduced is crucial for understanding and thinking of the probability that the situation will either work in favor or against you and how to prepare for those changes. "Whyte argued that prospect theory provides the psychological mechanism by which to explain escalating commitment to a failing course of action without the need to invoke self-justification processes. " Prospect theorists believe that one's use of this process is when there is a negative downfall in the stakes that will affect the outcome of the project. To ensure they will not fail, the individual may add more resources to assure them that they will succeed. Although this theory seems realistic, researchers "Davis and Bobko found no effect of personal responsibility on continued commitment to the previous course of action in the positive frame condition." Which means that escalation of commitment will be lower in the higher responsibility situation.Attribution theory
The attribution theory, originating from Fritz Heider, "attempts to find causal explanations for events and human behaviors." This theory approaches two methods of inquiry including locus of causality and stability. Locus of causality reflects on internal characteristics of an individual, such as intelligence levels and attention seeking, with the relationship of the external space such as weather forecasts and task difficulty. Aspects of control become a significant factor in how a manager justifies a decision made. Managers will use the relationship between internal and external factors to describe why they made a decision to a single point of view. Managers may justify their actions by explaining that this was out of their personal control of the event, or they could believe that the decision could not be controlled by anyone else. Research suggests that "the type of attribution made by an employee across these dimensions is likely to impact an employee's tendency to engage in the negative emotional activity referred to as escalation of commitment."Social identity theory
Identity is a large part of how we move through the world. Private thoughts and opinions as well as the effect of others create the social identity theory. People make connections between their use of groups and their own view of themselves, which researchers have discovered motivates people to keep their social status and to defend it whenever it is endangered.Theoretical models
Temporal model of escalation
Groups engage in temporal comparisons, which means that you compare actions and behaviors at "different points in time." This is a form of social identity scenario. This type of comparison can be made when a decision seems unproductive and forces team members to consider any threat to the group.Aggregate model
"The aggregate model's emphasis is upon the accumulation and balance of forces rather than the ordering of effects over time." The model is general and can provide an ideal view as to how the effects whether positive or negative are defined by micro and macro forces. This model goes by situation rather than what researchers have defined as the norm. There is no process to follow, which makes it very useful for researchers because they can understand a situation more clearly as well as see the bigger picture of the situation.Determinants
The main drivers of the tendency to continue investing in losing propositions are project, psychological, social, and structural.Project
Project determinants are those that refer to the original commitments and decisions made at a project's beginning. This includes general project characteristics and initial financial costs. Among them, decision risk, opportunity cost information, and information acquisition have been found to have negative relationships with escalation of commitment. Decision uncertainty, positive performance trend information, and expressed preference for initial decision have been found to have positive relationships.High costs of ending a project or changing its course, potential financial gain upon completion, and extensive structure can factor in to escalation of commitment, making it difficult to walk away from the project. Preventing future monetary loss, potential savings, and having clearly available alternatives can allow for avoidance of the behavior. In studies by Teger and later Ross and Staw, situations where ending an action costs more than completing it resulted in decision makers being trapped in their current, costly behaviors.