The Effect of Decision Risk and Project Stage on Escalation of Commitment

ScienceDirect, Organizational Behavior and Human Decision Processes 103 (2007) 225–237

13 Pages Posted: 15 Jul 2015

See all articles by Xin He

Xin He

University of Central Florida

Vikas Mittal

Rice University

Date Written: March 1, 2007

Abstract

We investigate the joint effects of decision risk and the stage of project completion on escalation of commitment. In two experiments, we demonstrate that the effect of decision risk is moderated by project stage such that the decision risk has the strongest effect on escalation of commitment at the intermediate stage of project completion. This is due to the dynamic influences underlying escalation of commitment. Whereas the need for project information influences resource commitment at the initial stage of a project, the need for project completion afefcts resource allocation at the terminal stage. In contrast, motivation to commit resources is disproportionately low at the intermediate stage since both the need for project information and the need for project completion are relatively weak. As such, the decision to commit resources is most sensitive to the moderating effect of decision risk when the project is about half complete.

Keywords: Escalation of commitment; Decision risk; Project stage; Project information; Project completion; Risk taking; Sunk cost

Suggested Citation

He, Xin and Mittal, Vikas, The Effect of Decision Risk and Project Stage on Escalation of Commitment (March 1, 2007). ScienceDirect, Organizational Behavior and Human Decision Processes 103 (2007) 225–237, Available at SSRN: https://ssrn.com/abstract=2630334

Xin He (Contact Author)

University of Central Florida ( email )

4000 Central Florida Blvd
Orlando, FL 32816-1400
United States

Vikas Mittal

Rice University ( email )

6100 South Main Street
250 McNair
Houston, TX 77005-1892
United States

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