Losing Face and Sinking Costs

Fighting for Status ◽

10.23943/princeton/9780691174501.003.0003 ◽

2017 ◽

Author(s):

Jonathan Renshon

Keyword(s):

Social Dominance ◽

Regression Models ◽

Investment Decision ◽

Social Dominance Orientation ◽

Sunk Costs ◽

Behavioral Measure ◽

Decision Task ◽

Escalation Of Commitment ◽

Course Of Action

This chapter explores the behavioral microfoundations of status dissatisfaction theory by conducting two simultaneously fielded experiments in which status concerns were randomly assigned prior to an “escalation of commitment” task. The first study replicates and extends a sunk costs experiment that asks subjects to make a hypothetical investment decision, while the second introduces the “Island Game” to provide a behavioral measure of escalation of commitment. Several regression models are estimated to determine how leadership affects the tendency to escalate in the primary decision task. The chapter also considers additional mechanisms that link status concerns to war through individuals' willingness to escalate their commitment to a failing course of action, including power and social dominance orientation (SDO). The results show that subjects with stronger preferences for hierarchy—that is, high in SDO—are most affected by status concerns and correspondingly more likely to exhibit patterns of biased escalation.

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Mindfulness and decision-making: Sunk-costs or escalation of commitment?

10.31234/osf.io/rzdvt ◽

2018 ◽

Author(s):

Neil Schmitzer-Torbert

Keyword(s):

Decision Making ◽

Sunk Costs ◽

Escalation Of Commitment ◽

Trait Mindfulness ◽

Sunk Cost ◽

Positive Health ◽

Course Of Action ◽

Cognitive Benefits ◽

Positive Health Outcomes ◽

The Relationship

Mindfulness is related to a number of positive health outcomes, such as decreased stress, anxiety and improved physical functioning. Recent studies have also identified a range cognitive benefits of mindfulness, including recent studies demonstrating that higher trait mindfulness and brief mindfulness inductions are associated with improved decision-making, and specifically to resistance to the influence of sunk-costs, where higher mindfulness is associated with increased willingness to discontinue a costly, but disadvantageous, course of action. However, some previous studies examining mindfulness and the sunk-cost bias have methodological limitations which make it difficult to determine if mindfulness is specifically related to sensitivity to the sunk-cost bias, or rather than to a general willingness to continue an unprofitable course of action (independent of the level of prior investment). The present study extends previous work by replicating the finding that trait mindfulness is positively related to resistance to the effects of sunk-costs, and also demonstrates that mindfulness is related to reduced escalation of commitment, an individual’s willingness to continue their commitment to a unprofitable course of action through the further investment of resources or time. Overall, trait mindfulness was most consistently related to reduced escalation of commitment, whereas the relationship between trait mindfulness and resistance to the effects of sunk-costs were less consistently observed

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When Action-Inaction Framing Leads to Higher Escalation of Commitment: A New Inaction-Effect Perspective on the Sunk-Cost Fallacy

Psychological Science ◽

10.1177/0956797617739368 ◽

2018 ◽

Vol 29 (4) ◽

pp. 537-548 ◽

Cited By ~ 12

Author(s):

Gilad Feldman ◽

Kin Fai Ellick Wong

Keyword(s):

Confidence Interval ◽

Negative Feedback ◽

Meta Analysis ◽

Sunk Costs ◽

Escalation Of Commitment ◽

Sunk Cost ◽

Course Of Action ◽

New Perspective ◽

The Impact

Escalation of commitment to a failing course of action occurs in the presence of (a) sunk costs, (b) negative feedback that things are deviating from expectations, and (c) a decision between escalation and de-escalation. Most of the literature to date has focused on sunk costs, yet we offer a new perspective on the classic escalation-of-commitment phenomenon by focusing on the impact of negative feedback. On the basis of the inaction-effect bias, we theorized that negative feedback results in the tendency to take action, regardless of what that action may be. In four experiments, we demonstrated that people facing escalation-decision situations were indeed action oriented and that framing escalation as action and de-escalation as inaction resulted in a stronger tendency to escalate than framing de-escalation as action and escalation as inaction (mini-meta-analysis effect d = 0.37, 95% confidence interval = [0.21, 0.53]).

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Escalation of Commitment: Supporting Role from Accountants

SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS ◽

10.29259/sijdeb.v4i2.87-94 ◽

2021 ◽

Vol 4 (2) ◽

pp. 87

Author(s):

Agil Novriansa ◽

Ahmad Subeki ◽

Aryanto Aryanto

Keyword(s):

Decision Making ◽

Undergraduate Students ◽

Investment Decision ◽

Investment Project ◽

Capital Budgeting ◽

Sunk Costs ◽

Financial Accounting ◽

Escalation Of Commitment ◽

Sunk Cost ◽

Investment Decision Making

Previous research has mostly examined the phenomenon of escalation of commitment in the context of decision making by managers in an investment project. However, in the capital budgeting process, before making investment decisions managers tend to consider information produced by accountants. This study examines the phenomenon of escalation of commitment using the perspective of supporting role of accountants as the party that provides information for investment decision making by managers, especially in the presence of sunk costs. This study uses a laboratory experimental method. The sample in this study are 156 undergraduate students majoring in Accounting who had passed Financial Accounting and Management Accounting courses. Based on the results of the independent sample t-test, it shows that accountants who experienced sunk cost conditions tend to provide reports that directed managers towards escalation of commitment behavior compared to accountants who do not experience sunk cost conditions. The presence of sunk cost makes accountants have better mind frame to get the possibility of profit compared with a definite loss so that the decisions they make tend to provide reports that lead to the escalation of commitment behavior.

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Escalation of Commitment with Transparent Future Outcomes

Experimental Psychology (formerly Zeitschrift für Experimentelle Psychologie) ◽

10.1027/1618-3169.52.1.67 ◽

2005 ◽

Vol 52 (1) ◽

pp. 67-73 ◽

Cited By ~ 18

Author(s):

Niklas Karlsson ◽

Tommy Gärling ◽

Nicolao Bonini

Keyword(s):

Decision Making ◽

Sunk Costs ◽

Escalation Of Commitment ◽

Full Information ◽

Comprehensive Understanding ◽

Alternative Investments ◽

Knowing That ◽

Course Of Action ◽

Future Outcomes

Abstract. A frequent case of irrational decision making is the tendency to escalate commitment to a chosen course of action after unsuccessful prior investments of money, effort, or time (sunk costs). In previous research it is argued that escalation does not occur when future outcomes and alternative investments are transparent. Inconsistent with this argument, in an experiment in which undergraduates were presented fictitious investment problems with sunk costs, escalation was demonstrated when full information was given about investment alternatives and estimates of future returns. Thus, it is indicated that people may escalate despite knowing that it will not make them economically better off. A more comprehensive understanding of escalation requires disentangling people’s noneconomic reasons for escalation.

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Exploring the Multidimensional Facets of Authoritarianism: Authoritarian Aggression and Social Dominance Orientation

Swiss Journal of Psychology ◽

10.1024/1421-0185.67.1.51 ◽

2008 ◽

Vol 67 (1) ◽

pp. 51-60 ◽

Cited By ~ 26

Author(s):

Stefano Passini

Keyword(s):

Social Dominance ◽

Factor Model ◽

Three Dimensional ◽

Social Dominance Orientation ◽

Model Fit ◽

Regression Analyses ◽

One Dimensional ◽

Confirmatory Factor ◽

The One ◽

Better Than

The relation between authoritarianism and social dominance orientation was analyzed, with authoritarianism measured using a three-dimensional scale. The implicit multidimensional structure (authoritarian submission, conventionalism, authoritarian aggression) of Altemeyer’s (1981, 1988) conceptualization of authoritarianism is inconsistent with its one-dimensional methodological operationalization. The dimensionality of authoritarianism was investigated using confirmatory factor analysis in a sample of 713 university students. As hypothesized, the three-factor model fit the data significantly better than the one-factor model. Regression analyses revealed that only authoritarian aggression was related to social dominance orientation. That is, only intolerance of deviance was related to high social dominance, whereas submissiveness was not.

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Process Accountability as a De-Escalation Technique

Journal of Personnel Psychology ◽

10.1027/1866-5888/a000245 ◽

2020 ◽

Vol 19 (2) ◽

pp. 63-74

Author(s):

Klaus Moser ◽

Hans-Georg Wolff ◽

Roman Soucek

Keyword(s):

Cognitive Processes ◽

Information Search ◽

Employment Relationship ◽

Escalation Of Commitment ◽

Tunnel Vision ◽

Course Of Action ◽

Performance Problems ◽

Over Time ◽

Biased Information

Abstract. Escalation of commitment occurs when a course of action is continued despite repeated drawbacks (e.g., maintaining an employment relationship despite severe performance problems). We analyze process accountability (PA) as a de-escalation technique that helps to discontinue a failing course of action and show how time moderates both the behavioral and cognitive processes involved: (1) Because sound decisions should be based on (hopefully unbiased) information search, which requires time to gather, the effect of PA on de-escalation increases over time. (2) Because continuing information search creates behavioral commitment, the debiasing effect of PA on information search diminishes over time. (3) Consistent with the tunnel vision notion, the effects of less biased information search on de-escalation decrease over time.

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