Do we really need to change the decision maker? Counterintuitive escalation of commitment results in real options contexts
© 2016 INFORMS. A robust finding in the escalation literature, termed as the preference e ect, is that involvement in the period 1 initial project assessment decision increases the tendency for decision makers to stick with a losing course of action during the period 2 project reassessment decision. The proposed solution is to bring in a new decision maker in period 2. Across multiple studies, we show that providing period 1 information in real options format increases the tendency for decision makers to view period 2 focal event information as both more negative and more important. Consequently, such decision makers exhibit less escalation in period 2, i.e., exhibit behavior opposite to the preference e ect. This suggests that, in real option contexts, not only do we not need to bring in a new decision maker, but also (counterintuitively) it is beneficial to retain the same decision maker in situations where escalation is likely to occur.
Boulding, W; Guha, A; Staelin, R
Volume / Issue
Start / End Page
Electronic International Standard Serial Number (EISSN)
International Standard Serial Number (ISSN)
Digital Object Identifier (DOI)