Escalating commitment

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The escalating commitment (also entrapment, sunk-costs- fallacy-effect or too-much-invested-to-quit syndrome) describes the tendency to feel obliged to an earlier decision and to support it by providing additional resources, although this decision has so far proven to be ineffective or wrong (see Brockner & Rubin, 1985; Staw & Ross, 1987).

definition

According to Brockner (1992) and Staw and Ross (1987) there are three defining characteristics for such escalating situations. First, a large amount of resources (e.g. money, time, emotions) have already been invested. Second, the path taken is unsuccessful (e.g. negative feedback). Thirdly, the decision-maker has the choice of trying to make further investments to save the project and thus also the resources already used, or to withdraw completely from this project. (Cf. Wong / Kwong (2007), p. 546.) In such a situation, the majority of people decide to hold on to the decision they have made and continue to invest.

Five main factors

There are four classic factors that describe behavior in escalating situations (cf. Ross / Staw (1986), p. 275). These four determinants of escalating commitment are:

  • Characteristics of the project;
  • Psychological reasons;
  • Social reasons and
  • Organizational reasons.

Later on, the context variable was added as a fifth factor to these four 'classic' factors . (See Staw (1997), p. 196.) The escalation is mostly the result of an interaction of these four or five variables. (See Drummond (1994), p. 43.)

Features of the project

The category Characteristics of the project summarizes factors that represent the economic characteristics of a project. (See Riesenhuber (2006), p. 176.)

Examples:

Project abandonment
cost amount: This means that the cost of abandoning the project increases the economic barrier to abandoning the project. (See Staw (1997), p. 197.)

Availability of feasible alternatives:
If there is no other usable and feasible alternative, there is a tendency to stick to the path taken so far. (See Staw (1997), p. 197.)

Psychological reasons

The factors summarized under the determinant psychological reasons relate to individual psychological phenomena. (See Riesenhuber (2006), p. 177.) Examples:

Self-justification:
Perhaps the most widely studied psychological factor is the tendency towards self-justification. For example, in 1976 Staw found out that people who were personally responsible for the project showed a higher level of commitment than those who were not responsible for the original decision. This has been interpreted to mean that these decision-makers invested additional resources to justify their chosen path. (See Ross / Staw (1986), p. 275.) The confession of having made an incorrect decision is difficult to reconcile with one's own self-image (see also cognitive dissonance ). For this reason, many decision-makers ignore the negative tips and do not change their initially chosen course. (See Staw (1997), pp. 199f.) Optimism: Prejudiced optimism
plays a major role in investment decisions in particular: People tend to assume that everything will turn out for the better, including a project that is obviously in danger of failing. According to the motto “only others are unlucky”, they tend to overestimate their own happiness and underestimate the likelihood of negative results. You are subconsciously of the opinion that you act better than others and therefore prevent future missteps better than other people. (See Staw (1997), p. 198.)

Social reasons

The social determinants differ from the psychological ones in that their effects persist even when the actor is no longer convinced of the current strategy. So he is sticking to a decision, although he no longer expects a positive result. (Riesenhuber (2006), p. 178.) The origin of this factor can mostly be derived from the social environment of the actor.

Examples:

Notions of a leader:
This factor can also be described as the “hero effect”. In many cases, when evaluating managers, such as B. Abraham Lincoln or Winston Churchill, those people perceived as strong characters who face difficulties and stick to their course until they are ultimately successful. (See Ross / Staw (1986), p. 272.) And since this stamina is expected, a project termination or the revision of a decision is often interpreted as a sign of incompetence and a lack of leadership. Therefore, attempts are made to avoid termination at all costs. (See Staw (1997), pp. 203f.) External justification:
The escalation can also be justified in the attempt to save face. (Cf. Drummond (1994), p. 44.) People very often hesitate to admit a mistake to others and continue the project against their better judgment. (See Ross / Staw (1986), p. 277.)

Organizational reasons

In the category of organizational or structural reasons , all factors are combined that affect the organizational environment of the decision. (See Riesenhuber (2006), p. 179.)

Examples:

Bureaucracy:
Organizations such as companies or states are often slow in their decision-making due to bureaucracy. So it can happen that a problem is recognized, but there are some bureaucratic barriers between the problem perception and the drawing of consequences. This can delay a project termination. (See Staw (1997), p. 204.)

Political pressure:
Political reasons can also be listed here: If people who would be negatively affected by a project termination have enough power, they can prevent a termination or at least offer so much resistance that it is delayed. (See Staw (1997), p. 204.)

Reputation of the organization:
These organizational reasons include, for example, the case when a project is closely linked to the values ​​and reputation of a company or a party. For this reason, companies or parties often do not even think about abandoning a project because it is too closely linked to their reputation. (See Ross / Staw (1986), p. 278.)

Contextual reasons

In some cases, the project can be influenced by a factor that has an external effect on the company or the project.

Examples:

Political context:
This can be, for example, the political government or a government organization. In the case of the Shoreham nuclear power plant , which is located in the US state of New York about 60 kilometers east of Manhattan, the United States Department of Energy exerted a great deal of influence in continuing the project, although enormous problems were identified early on. This power plant ultimately cost six billion US dollars instead of the planned 75 million US dollars. (See Staw (1997), p. 205.)

Behavioral research / explanatory approaches

There are some theories from behavioral research that are used to explain escalating commitment, including: (See Sleesman et al. (2012))

Self-justification :
There are two different approaches to self-justification theory. First, the decision maker tries to convince himself of the rational necessity of his decision. Or he tries to show this rationality to others. This second form of the self-justification hypothesis is particularly important in connection with organizations. (See Staw (1976), p. 41f.)

Prospect Theory :
The most important cornerstone of Prospect Theory is the framing effect. This means that negative and positive decision alternatives are judged differently. When there is a choice between a certain loss or the possibility of a greater loss combined with the prospect of getting the original expected outcome, decision-makers prefer the riskier option. However, if positive decision-making alternatives are available, then risk-averse behavior can be observed. Transferred to behavior in escalating situations, the decision is usually made to invest additional resources in the unprofitable project. (See Staw (1997), pp. 199f. & Salter et al. (2013), p. 162)

Self-presentation theory:
The decision maker tries to present himself positively to others. So, for example, a project is not canceled because the fear of other employees of appearing as a bad leader is too great.

Regret theory:
This is the emotion of remorse that the decision maker experiences when he realizes that he has made wrong decisions in the past. So that his current situation would be better if he had changed his mind in previous decisions. There is also anticipated repentance. This is the case when a person looks to the future and imagines the possible remorse they will feel when a specific decision is made in the present. So the idea behind the regret theory is that many people avoid making decisions that they may regret in the future. So the alternative course of action is often chosen which triggers the least possible remorse in the future. Applied to escalating commitment, this theory means that the person weighs up before making a decision. In fact, the decision maker compares the anticipated regret for remaining in a project with the anticipated regret of abandoning a project and chooses the path which supposedly causes less regret in the future. (See Wong / Kwong (2007), pp. 545f.)

Examples

Staw / Hoang examined escalating commitment in a field study as part of the NBA . They investigated to what extent the order of the NBA drafts has an influence on the length of the game and the probability of the players selected in the draft changing. The result was clear. The players who were selected earlier in the NBA Draft were given more playing time, were sold less often and had a longer stay in the NBA. In summary, the result of this field study was that the player-related sunk costs were decisive in the decisions made by the teams, and not - as one would assume - the actual performance of the drafted players on the field. (See Staw / Hoang (1995)) Escalating commitment can also be seen in top-class sport when costly but inefficient players are retained.
An everyday example of escalating commitment can, for example, be the behavior of waiting particularly long for the bus, even though one would have covered the distance traveled much faster on foot. (See Brockner (1992), p. 39.)
People who are dissatisfied with their current job or their relationship have to deal with the same problem. Here, too, a decision has to be made as to whether it makes sense to keep this state or to venture a new start in another company or with another partner. (See Staw (1997), p. 191.)
Even if these examples come from the most varied of areas, they have a lot in common. All these constellations have negative consequences, a chosen path does not work as desired or a loss due to previous wrong decisions was the result. (See Staw (1997), p. 191)

Individual evidence

  1. ↑ Brockner, J. & Rubin, JZ (1985). Entrapment in escalating conflicts . New York: Springer.
  2. ↑ Staw, BM & Ross, J. (1987). Behavior in escalating situations. In BM Staw & LL Cummings (Eds.), Research in organizational behavior (pp. 12–47). Greenwich, CT: JAI Press.
  3. ↑ a b Wong, Kin Fai Ellick / Kwong, Jessica YY (2007), The Role of Anticipated Regret in Escalation of Commitment, in: Journal of Applied Psychology, Vol. 92, 2007, pp. 545-554.
  4. ^ A b c d e Ross, Jerry / Staw, Barry M. (1986), Expo 86: An Escalation Prototype, in: Administrative Science Quarterly, Vol. 31, 1986, pp. 274-297.
  5. ↑ a b c d e f g h i j k l Staw, Barry M. (1997), The escalation of commitment: An update and appraisal, in: Shapira, Zur (Ed.), Organizational decision making, 1997, Cambridge, Pp. 191-215.
  6. ↑ a b Drummond, Helga (1994), Escalation in Organizational Decision Making, in: Journal of Behavioral Decision Making, Vol. 7, 1994, pp. 43-55.
  7. ↑ a b c d Riesenhuber, Maximilian (2006), The Wrong Decision, Wiesbaden.
  8. ↑ Sleesman, Dustin J./Conlon, Donald E./McNamara, Gerry / Miles, Jonathan E. (2012), Cleaning up the Big Muddy: a Meta-analytic Review of the Determinants of Escalation of Commitment, in: Academy of Management Journal, Vol. 55, 2012, pp. 541-562.
  9. ↑ Staw, Barry M. (1976), Knee-Deep in the Big Muddy: A Study of Escalating Commitment to a Chosen Course of Action, in: Organizational Behavior and Human Performance, Vol. 16, pp. 27-44.
  10. ↑ Salter, Stephen B./Sharp, David J./Chen Yasheng (2013), The moderating effects of national culture on escalation of commitment, in: Advances in Accounting, incorporating Advances in International Accounting, Vol. 29, 2013, pp. 161-169.
  11. ↑ Staw, Barry M./Hoang, Ha (1995), Sunk Costs in the NBA: Why Draft Order Affects Playing Time and Survival in Professional Basketball, in: Administrative Science Quarterly, Vol. 40, 1995, pp. 474-494.
  12. ↑ Brockner, Joel (1992), The Escalation of Commitment To A Failing Course Of Action: Toward Theoretical Progress, in: Academy of Management Review, Vol. 17, 1992, pp. 39-61.