Escalation of commitment is a behavioral phenomenon in which an individual or group continues to invest resources (e.g., time, money, effort) into a decision, activity, or situation despite evidence that the cost of continued investment outweighs the expected returns. The term was first coined by Staw (1976) and has since been studied extensively in various fields, including economics, psychology, and management.
Escalation of commitment is often caused by a “sunk cost fallacy”, which is a tendency for individuals to consider sunk costs irrelevant when making decisions, and to instead focus on potential gains (Staw, 1981). This bias can lead to irrational decision-making, such as investing more resources into a project despite evidence that success is unlikely. Thus, individuals can become overly committed to their decisions and unwilling to admit failure or accept losses.
Escalation of commitment has been studied in various contexts, including business decisions (Staw, 1976), romantic relationships (Neff & Karney, 2004), and political conflicts (Gartzke, 2007). Research has identified a number of factors that can contribute to escalation of commitment, such as the presence of a strong leader (Staw, 1976), high self-esteem (Petersen & Sapienza, 2007), and group dynamics (Staw, 1976). Additionally, individuals are more likely to show escalation of commitment when faced with a difficult decision or when they are uncertain about the outcome (Staw, 1981).
The consequences of escalation of commitment can be significant, both for individuals and organizations. For example, individuals can become overly invested in a project and fail to recognize when it is no longer beneficial to continue, which can lead to wasted resources and poor decisions. Similarly, organizations can become entrenched in a particular course of action, which can lead to inefficiency and missed opportunities. Therefore, it is important for individuals and organizations to be aware of the potential for escalation of commitment and to take steps to avoid it.
In conclusion, escalation of commitment is a common phenomenon that can lead to irrational decision-making and wasted resources. It is important for individuals and organizations to be aware of the factors that can contribute to escalation of commitment and to take steps to avoid it.
References
Gartzke, E. (2007). The capitalist peace. American Journal of Political Science, 51(1), 166-191.
Neff, L. A., & Karney, B. R. (2004). Escalation of commitment in close relationships. Personality and Social Psychology Review, 8(3), 265-272.
Petersen, M. B., & Sapienza, P. (2007). Self-esteem and financial risk taking. The Journal of Finance, 62(3), 1133-1157.
Staw, B. M. (1976). Knee-deep in the big muddy: A study of escalating commitment to a chosen course of action. Organizational Behavior and Human Performance, 16(1), 27-44.
Staw, B. M. (1981). The escalation of commitment to a course of action. Academy of Management Review, 6(4), 577-587.