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Escalation of commitment refers to a cognitive bias where individuals or organizations continue to invest in a decision despite clear evidence that it may be failing or no longer viable. This phenomenon occurs when those involved irrationally persist in a course of action due to prior investments of time, money, or resources.
This bias is driven by several psychological and social factors. Individuals may continue committing to a failing course due to the sunk cost fallacy, where they are unwilling to abandon what has already been invested. Additionally, they may face pressures to justify past decisions, a desire not to appear inconsistent, or hope for possible future success. Emotions, such as stubbornness and pride, also play critical roles, as the fear of failure or loss of face propels continued investment.
Examples of escalation of commitment frequently occur in corporate and governmental projects. A classic case is the Concorde supersonic airplane project, where both British and French governments continued investing heavily despite evident financial losses. Similarly, during the Vietnam War, the US persisted with its military strategy despite growing evidence of its futility.
The consequences of escalation of commitment can be substantial, often leading to increased losses, wasted resources, and missed opportunities. It can entrench organizations or individuals in destructive paths and create significant financial and reputational damage.
Counteracting escalation of commitment involves implementing systematic decision-making processes that encourage objective reevaluation of ongoing projects. Encouraging a culture that welcomes critical feedback and alternative viewpoints can also help. Decision-makers should focus on future prospects instead of past investments and integrate structured exit strategies in their plans.
Critics argue that not every instance of persisting with a course of action represents a cognitive bias. In some cases, continued investment might be based on rational expectations of future benefit not immediately apparent. Additionally, perseverance can sometimes lead to breakthroughs that a premature withdrawal could prevent.
Knee-deep in the big muddy: A study of escalating commitment to a chosen course of action.
Staw, B. M. (1976)
Organizational Behavior and Human Performance
The psychology of sunk cost.
Arkes, H. R., & Blumer, C. (1985)
Organizational Behavior and Human Decision Processes