Escalation of commitment is the tendency to continue investing time, money or effort in a failing course of action because of the resources already committed to it, rather than reassessing the decision based on its current prospects. It is closely related to, though broader than, the sunk cost fallacy, and it has been studied extensively in organizational and management settings, where individuals or committees that made an initial decision often continue funding a failing project well past the point at which a fresh decision-maker would abandon it. The psychologist Barry Staw's early research on the phenomenon, including his 1976 study on self-justification in investment decisions, helped establish it as a distinct area of behavioral research into decision-making under uncertainty.
Facts
Core ClaimA widely cited real-world example is property developer Robert Campeau's acquisition of Bloomingdale's, where an aggressive bidding war led him to pay an estimated 600 million dollars more than the retailer was worth. 1 First Described Year Classification
Type of Phenomenon Sources
1. Wikipedia: Escalation of commitment
Wikimedia Foundationreal-world examples subsection, Campeau and Bloomingdale's
After a heated and aggressive bidding war, property developer Robert Campeau ended up buying Bloomingdale's for an estimated $600 million more than it was worth.
history and origin subsection, Staw 1976
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".
lead section, phenomenon-kind classification
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.
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