Escalation of commitment or escalating commitment may be described as the tendency to become increasingly committed to bad decisions even as losses associated with them increase. It is the tendency to get trapped in bad decisions.
In everyday language, escalation of commitment is referred to as “throwing good money after bad.” For example, we invest in the shares of a company whose price keeps falling. Instead of accepting it as a bad decision and getting out of it, we tend to pour in more money resulting in bigger losses.
The following explanations have been put forth to explain the problem of escalating commitment:
(1) Self-justification: Individuals experience a growing need to justify their previous judgments and the losses already endured. In other words, they want to prove that they have been right all along and all that it requires is additional investment or effort. They hope that the ends will justify the means.
(2) Selective perception: The individual tends to pay more attention to information that justifies his decision and overlooks information to the contrary. This results in further escalation of commitment.
(3) Social pressure: Society admires people who battled in the face of difficulties. The desire to live up to social expectations is one of the causes of escalating commitment.
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