Selective Attention as a Determinant of Escalation Bias in Subjective Performance Evaluation Judgments

Abstract

We use an experiment to examine escalation bias in subjective performance evaluations. Participants assume the role of manager and evaluate the performance of an employee based on a balanced scorecard-type performance report. We manipulate whether managers recommended positively or negatively about the evaluated employee’s promotion to his current position. Consistent with the presence of escalation bias, we find that managers give higher performance ratings to employees about whom they advised positively than to employees about whom they advised negatively. We then examine the role of selective attention in the emergence of this escalation bias. Using eye-tracking data, we investigate whether escalation bias arises because managers with different prior commitments towards the evaluated employee pay attention to different items in the scorecard. We find no evidence that this is the case. Specifically, the eye-tracking data indicate that evaluators’ prior recommendation did not affect what proportion of their visual attention was given to favorable (versus unfavorable) performance measures, and that the relative attention paid to favorable measures is not associated with the performance rating.

Keywords: Performance evaluation, Performance appraisal, Escalation of commitment, Eye-tracking, Balanced scorecard

JEL Classification: M12, M40, M51, M52