Summary: Escalation of commitment was first described by Barry M. Staw in his 1976 paper, “Knee deep in the big muddy: A study of escalating commitment to a chosen course of action”. More recently the term sunk cost fallacy has been used to describe the phenomenon where people justify increased investment in a decision, based on the cumulative prior investment, despite new evidence suggesting that the decision was probably wrong. Such investment may include money, time, or — in the case of military strategy — human lives. The phenomenon and the sentiment underlying it are reflected in such proverbial images as Throwing good money after bad and In for a dime, in for a dollar (or In for a penny, in for a pound).

The term is also used to describe poor decision-making in business, government, information systems in general, software project management in particular, politics, and gambling. The term has been used to describe the United States commitment to military conflicts including Vietnam in the 1960s – 1970s and in Iraq in the 2000s, where dollars spent and lives lost justify continued involvement.[2]

Alternatively, irrational escalation (sometimes referred to as irrational escalation of commitment or commitment bias) is a term frequently used in psychology, philosophy, economics, and game theory[citation needed] to refer to a situation in which people can make irrational decisions based upon rational decisions in the past or to justify actions already taken. Examples are frequently seen when parties engage in a bidding war; the bidders can end up paying much more than the object is worth to justify the initial expenses associated with bidding (such as research), as well as part of a competitive instinct.

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Escalating Commitment to a Course of Action: A Reinterpretation

Escalating commitment to a losing course of action is usually attributed to a need on the part of decision makers to maintain the illusion that they have not erred. Prospect theory suggests a different explanation for this commonly observed tendency–escalating commitment is seen as an artifact of the framing of decisions. As a result, escalating commitment may occur in a much wider variety of circumstances than is suggested by the view that it is a product of self-justification motives.

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Knee-deep in the big muddy: a study of escalating commitment to a chosen course of action

It is commonly expected that individuals will reverse decisions or change behaviors which result in negative consequences. Yet, within investment decision contexts, negative consequences may actually cause decision makers to increase the commitment of resources and undergo the risk of further negative consequences. The research presented here examined this process of escalating commitment through the simulation of a business investment decision. Specifically, 240 business school students participated in a role-playing exercise in which personal responsibility and decision consequences were the manipulated independent variables. Results showed that persons committed the greatest amount of resources to a previously chosen course of action when they were personally responsible for negative consequences.

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