Escalation of commitments is a pattern of human behavior in which individuals or groups who face an increasingly negative outcome of some decision, action, or investment continue to behave the same way rather than change direction. This actor maintains irrational behavior, but is in tune with previous decisions and actions.
Economists and behavioral scientists use related terms, ugly sunk-cost , to illustrate the justification of increased investment of money, time, life etc. In decisions, based on previous cumulative investments ("sinking costs"); although new evidence suggests that the cost, starting immediately, continuing the decision outweighs the expected benefits.
In sociology, the irrational escalation of commitment or commitment bias represents similar behavior; and the underlying phenomenon and sentiment is reflected in the proverbial image like "throwing good money after a bad one" or "in a penny, in a pound".
Video Escalation of commitment
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The escalation of commitment was first described by Barry M. Staw in his 1976 paper, "Kneeling in a large mud: A study of increased commitment to the chosen action".
The researchers, inspired by Staw's work, conducted a study that examined the factors, circumstances and causes of escalation of commitments. This research introduces an analysis of other situations and how people approach problems and make decisions. Some of the earliest works stem from events where these phenomena have an effect and help explain the phenomenon.
The researcher specifies the escalation of commitment
Over the last few decades, researchers have followed and analyzed many examples of escalating commitments to a situation. The escalating situation is described in three elements. First, the situation has very expensive resources such as time, money, and people invested in the project. Furthermore, past behavior leads to a peak at a time when the project has not met expectations or can be in a cautious state. Finally, all of these issues force decision makers to make choices that include the option to continue the project through to completion by adding an additional cost, or canceling the project altogether.
The researchers also developed an argument about how the escalation of commitment is observed in two different categories. Many researchers believe that the need to increase resources is related to the theory of hope. "From that point of view, the decision maker assesses the probability that the allocation of additional resources will lead to the achievement of the objectives, as well as the value of the achievement of the goal (ie, the rewards minus costs), and thus produce the expected subjective utility associated with the decision to allocate resources "The next phase of the escalation process is self-justification and rationalization if the decisions the leader makes use of resources well, if the resources used are used to make positive change, and assure themselves that the decision they choose is correct. Leaders must balance the costs and benefits of any problem to produce a final decision. What is most important in convincing leaders that they make the right choice regardless of the end result is if their decision is what others believe.
Research conducted on the topic has been drawn from various forms and theories of psychology. Many believe that what researchers have done so far to explain this behavior is best analyzed and tested through the development of situations and resource allocations.
Vietnam War
Escalation of commitments can repeatedly lead to changes in behavior by locking resources. One of the first examples of escalation of commitments is described by George Ball, who wrote to President Lyndon Johnson to explain to him the outcome of the war:
The decision you are facing now is very important. After a large number of US troops committed to direct combat, they will begin to take many casualties in wars that they are not equipped to fight in uncooperative villages if not completely hostile. Once we suffer many victims, we will begin an almost irreversible process. Our involvement will be so great that we can not - without national humiliation - not achieve our full objectives. Of the two possibilities, I think the humiliation will be more likely than the achievement of our goals - even after we pay a terrible fee.
Maps Escalation of commitment
Theory
Self-justification
The process of self-justification thinking is part of the commitment decisions of leaders and group managers so that it can lead to increased levels of commitment. This attitude gives "one explanation as to why people increase their commitment to their past investments." The manager makes decisions that reflect his previous behavior. Managers tend to remember and follow information that aligns with their behavior to create consistency for their current and future decisions. If group members or outsiders recognize inconsistent decisions, this may alter the manager's leadership role. Managers have an external influence from society, peers, and authority, which can significantly alter manager's perceptions of what factors are realistically important when making decisions.
Prospect theory
Prospect theory helps illustrate the natural reactions and processes involved in decision making in risk-taking situations. Prospect theory makes an argument for how the level of wealth, whether it's people, money, or time, affects how decisions are made. Researchers are very interested in how people perceive situations based on cost and benefits. Framing on how problems are introduced is crucial to understanding and thinking about the probability that the situation will either benefit you or against you and how to prepare for the change. "Whyte (1986) argues that the theory of the prospect provides a psychological mechanism for explaining the increased commitment to the failure of action without the need for a self-justification process (Fiegenbaum & Thomas 1988: 99)" Prospective theorists believe that the use of this process by a person when there is a negative fall in the stakes that will affect the outcome of the project. To make sure they will not fail, individuals can add more resources to convince them that they will succeed. Although this theory seems realistic, the researchers "Davis and Bobko (1986) found no effect of personal responsibility on the ongoing commitment to previous action in positive frame conditions." Which means the escalation of commitment will be lower in a higher responsibility situation.
Attribution theory
Attribution theory, derived from Fritz Heider, "seeks to find a causal explanation for human events and behavior." This theory approximates two methods of investigation including locus of causality and stability. The focus of causality reflects on the internal characteristics of the individual, such as the level of intelligence and attention seeking, with external space relationships such as weather forecasts and task difficulties. The control aspect becomes an important factor in how a manager justifies the decision made. Managers will use relationships between internal and external factors to explain why they make decisions to a single point of view. Managers can justify their actions by explaining that this is beyond their personal control of the event, or they can believe that the decision can not be controlled by others. Research shows that "the type of attributions made by employees across these dimensions tends to impact employees' tendency to engage in negative emotional activity called commitment improvement."
Social identity theory
Identity is a big part of how we move in the world. Personal thoughts and opinions and the effects of others create a theory of social identity. People make connections between the use of their group and their own views, which researchers have found motivating people to maintain their social status and to defend it whenever threatened.
Theoretical model
Temporary escalation model
Groups engage in temporary comparisons, which means you compare actions and behaviors at "different time points". This is a form of social identity scenario. This type of comparison can be made when decisions appear unproductive and force team members to consider any threats to the group.
Aggregate model
"The emphasis of the aggregate model is on the accumulation and balance of forces rather than ordering effects over time." The model is general and can provide an ideal view of how. The effect of whether positive or negative is determined by micro and macro forces. This model runs based on a situation rather than what the researchers define as the norm. There is no process to follow, which makes it very useful for researchers because they can understand the situation more clearly and see a bigger picture of the situation.
Determinants
The main drivers of the tendency to continue to invest in losing propositions are project, psychological, social, and structural.
Project
Project determinants are those that refer to the initial commitments and decisions made at the start of the project. These include general project characteristics and initial financial costs. Among them, decision risks, opportunity cost information, and information acquisition have been found to have a negative relationship with the escalation of commitments. Decision uncertainty, positive performance trend information, and stated preference for initial decisions have been found to have a positive relationship.
The high cost of ending the project or changing its direction, the potential for financial gains once completed, and the broad structure can be a factor of increased commitment, making it difficult to leave the project. Preventing future monetary losses, potential savings, and having a clearly available alternative can make it possible to avoid behavior. In a study by Teger and later Ross and Staw, situations where ending cost actions more than resolving resulted in decision-makers caught in their current, expensive behavior.
Psychological
Psychological determinants are those that refer to an internal view of the actions and information involved in a project. These can include cognitive, personality, and emotional factors related to project elements. Of these, charred costs, time investment, decision-making experience and expertise, self-efficacy and confidence, personal responsibility for early decisions, ego threats, and proximity to project completion have been found to have a positive relationship with the escalation of commitments, while anticipated regret and Framing positive information is found to have a negative relationship.
Optimism and the belief that one has control over what will remain a positive outcome leads to sustained self-justification of commitment to action. People add up their initial personal investments in the hope that they will overcome current negative results. This is illustrated in a case study by Staw, where assigning responsibility to students who are manipulated for initial decisions and their results results in the greatest commitment to improving action and resources when initial assignments are assigned to be made directly by students with poor results. In this case, people take further risks in an effort to avoid further problems. This is even more likely when the subject sees current issues have an unstable reason than stable reasoning, or when individuals are unwilling to admit mistakes. They then believe the situation will stabilize or reverse. Confirmation of bias can also lead to an escalation of commitment because individuals are less likely to recognize the negative outcomes of their decisions. On the other hand, if the results are recognized, they can be blamed on unforeseen events occurring during the project.
The effect of sunk cost is often seen as an escalation of commitment. As the amount of investment is greater and irreversible, the desire to avoid a complete loss of resources and maintain with impression management will encourage sustainable investment to withdraw. Thus, because the resources invested can include time, proximity to project completion yields similar results. More value is placed on the project when they are early or late in their process due to the clarity of the settlement objectives at these points. It is more likely that risks will be taken at these points than in projects closer to the visible midpoint.
Social
Social determinants are those that refer to the expectations and influences of other individuals or groups on project action. Including, group identity or cohesive forces have been found to have the greatest impact on the escalation of commitments while public evaluation of decisions and rejection of decisions of others has little significance in relation to them.
External justification and binding
Individuals present themselves cautiously to others in the ward. They do not concentrate on themselves and what they believe to be accurate and competent - they are only interested in their competent-looking organizations. The escalation of commitment is about decision making that usually comes in the form of groups or individuals that determine an action. Managers have a responsibility to choose the fate of what a group of people have done. A manager who decides to support a team from a project does not care that the project fails, they worry that team members might think that the manager is incompetent. Studies that examine this phenomenon include factors such as policy resistance, job insecurity (Fox & Staw 1979), and audience size (Rubin & Lang 1981). All show a spike in commitment when these realistic factors are present. This mental and emotional response is called a facial rescue effect. Individuals who are responsible for others always check themselves to ensure that their actions and beliefs are aligned with expectations for their audience. A person's social identity to the public can determine your destiny. For example, a team can identify a level of commitment and a personal connection with an idea or project. Team members consistently use statements like "the project is Bob's baby," or "oh, we have the same idea." Both ends of the spectrum are crucial to how others view and analyze the situation, especially something that fails.
Leadership norm
Leaders are responsible for guiding the team through difficult issues into solutions. Although repeatedly, the negative aspects of commitment can be discussed in more detail and are important, there are many positive social rewards. One example of this phenomenon is persistence. A project on the brink of failure is the responsibility of a manager to bounce back, but with persistence, a manager can be rewarded for turning a bad project into something great. The prize is gained because it reverses the team to produce something successful. When managers cling to their goals, and get their team to produce responsibly.
Structure
Structural determinants are those that refer to the features and cultural and environmental resources of the entire project organization. The minimal research available to them suggests that agency problems most influence the escalation of commitment.
There are macro-level variables that affect the organizational structure of the team and how the decision is made. Decisions are made on the basis of the individual in the group setting with specific roles and responsibilities and making decisions that are the product of team interaction. Determinants affecting the escalation of commitment are the institutional inertia. This phenomenon is used to describe how attitudes and behaviors of individuals often change, so, group stature is also unpredictable and can be controlled. "Organizations have a very imperfect sensory system, making them relatively immune to changes in their environment."
This is one factor that plays a role in how the problem is handled. When there is a group of individuals involved in communication, decisions, and change, with a lack of consistency in groups, most tasks fail to be resolved. This phenomenon occurs in situations such as changes in policies, decisions and procedures.
This problem can also cause havoc to organizations when they are too attached to policy, thought processes or identity because they are not free to change. "Sometimes, projects, products, or policies can be closely related to the values ​​and goals of the organization so it is almost unthinkable to consider withdrawals." One of the main examples of this phenomenon is the fall of Pan American World Airways company, commonly known as Pan Am. Pan Am is a famous airline and hotel with hundreds of employees. With industry turnover, airline policies are deregulated and causing financial collapse for Pan Am. Companies from time to time make cuts to their companies to stay afloat. The company believes that their image as an airline is more important than being a successful company that they remove all assets that actually make them the largest revenue amount just to save the image they think it needs to remain Pan My.
Groups vs individuals
In groups, it can be more difficult to associate problems with a simpler single determiner. While the deciding factor still applies, there are often more complex factors when organizational goals and actions are out of sync. Groups, especially when they grow bigger, can withstand changes.
Even if the need to change course or action cessation is recognized, the speed of communication, policy, and business politics can be a barrier. Larger organizations, especially those with sub-group dissemination, should communicate arguments and decisions to counter previous actions at the appropriate level. If this communication does not occur in a timely or blocked manner, the final decision can not be made and acted upon. Decisions that are contrary to existing rules and processes can also reach rejection even with support from within their organization. Individuals and groups who are directly employed because of the project, having shares in it can provide enough resistance to prevent changes being made as well. They feel personally responsible for the parts they are working on and can also feel that they are also being replaced or stopped. The escalation of commitment can occur in these situations. External groups can play a bigger part in increasing commitment if their power is greater than the group that takes action and they use that power to lead and influence directly.
With the larger number of decision makers included, groups have opportunities for greater productivity than single individuals, but they also have the opportunity for greater loss and escalation. Members can eliminate some potential escalation if they make better decisions early in the process and avoid the need to change directions dramatically. But they can also hold a larger support base for their initial action to the point where escalation potential increases. In this case, groupthink helps in accordance with the original decision and pressure on conformity rather than dividing the group with other options. Also, groups whose members are not cohesive may experience a decrease in the potential escalation due to conflict and the various levels of inclusion in the process.
Organizations that are family businesses are particularly vulnerable to escalating commitments because of the additional level through the family structure alongside the business structure, allowing further conflicts between the two. Reputation of business, customer and loss of stock, and financial loss becomes a risk.
Example
- The dollar auctions are mind exercises that show the concept.
- After a hot and aggressive bidding war, Robert Campeau finally bought Bloomingdale for about $ 600 million more than his value. The Wall Street Journal notes that "we do not deal with prices anymore but ego." Campeau was forced to declare bankruptcy shortly thereafter.
- Certain fraud schemes exploit this behavior, such as the Nigerian Scam 419, where victims continue to spend money on alleged business transactions, although the fraud character of the deal is obvious to those who are not involved.
- Big Dig in Boston
- Shoreham Nuclear Power Plant
- IT Taurus Project
- AIG Government Help
- 30-40% of software projects experience escalation of commitment due to its complexity and uncertainty. Intangibility makes determining current project status very difficult.
- Denver International Airport baggage handling system for 2 years and $ 2 billion over budget
- 6 years and $ 1 billion spent by the US Air Force on a battle support system that is not working
- Sony's continued participation in electronics after losses of $ 8.5 billion over 10 years
- Group support and investment and advocacy at the 21st Century Community Learning Center, which failed to meet its objectives
- Continuing Funding for Drug Abuse Resilience Education Program, which does not lead to a significant reduction in drug use
- Sustainable public investment and dependence on fossil fuels in the face of increasingly available alternatives and climate consequences
See also
- Brinkmanship
- Escalation conflict
- The cost is flooded
- Loss removal
- True-believer syndrome
References
Source of the article : Wikipedia
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