Escalation Of Commitment In Groups And The Moderating Effects Of Information Framing

Abstract

The escalation effect occurs when managers elect to commit additional resources to a project where the unfavorable economic prospects indicate the project should be canceled. It has been suggested that the context in which the decision is reached (e.g., a managers responsibility for the original decision to invest in a project) may influence a managers decision choices (Staw 1981). Bazerman (1984) suggests that framing of information used by decision-makers may explain the escalation effect. This study investigates whether responsibility for a prior decision will affect decision-making in interactive groups in an escalation situation. Additionally, this study looks at the effect of framing on the groups decisions and examines the ability of framing to moderate the escalation effect resulting from responsibility. The results suggest that groups are subject to escalating commitment when they are responsible for a prior related investment decision. The results also provide evidence that groups are influenced by the framing of decision-relevant information, and further, that the framing may have the ability to moderate the effects of responsibility. Implications for organizational decision making are provided.