Escalation of commitment
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.
How it works
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
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.
Consequences
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
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.
Critiques
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.
Also known as
Relevant Research
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
Case Studies
Real-world examples showing how Escalation of commitment manifests in practice
Context
NovaPay, a mid-sized fintech specializing in peer-to-peer mobile payments, decided to expand into a promising emerging market after a small pilot showed moderate engagement. Leadership committed significant engineering, legal and marketing resources to meet an aggressive nine-month launch timetable.
Situation
Three months into full-scale development, the pilot region’s user-acquisition rates plateaued well below forecasts, early regulatory guidance indicated high compliance costs, and local partners delayed integrations repeatedly. Despite these signals, the executive team pushed to keep the original launch timeline and increased the project budget.
The Bias in Action
Decision-makers repeatedly justified further investment by pointing to sunk costs (development hours, signed contracts with local vendors and marketing spend) and to the reputational cost of pulling out after public announcements. Managers downplayed negative metrics and reframed short-term setbacks as temporary implementation issues rather than structural market problems. Dissenting voices who recommended pausing to reassess were marginalized or asked to produce more optimistic projections. As a result, more teams were reallocated and additional contractors were hired to chase the original objectives.
Outcome
Eighteen months after the pilot, NovaPay launched a product that failed to reach scale: customer acquisition cost was three times the original estimate and active user numbers were below the pilot peak. The company recorded a direct loss from the project, delayed other priority initiatives, and saw morale fall in engineering and compliance teams.