Escalation of commitment occurs when a person invests capitals into a course of action that is failing. Resources can be time, money, energy, etc. that we continue to put into an investment because we do not want to appear to be inconsistent in our decision-making. Another similar effect is the anchoring effect (Links to an external site.) (Links to an external site.) it describes how decision makers fixate on initial information as a starting point and then, once set, fail to adequately adjust for subsequent information. First impressions, ideas, prices, and estimates carry unwarranted weight relative to information received later. When decision makers selectively organize and interpret events based on their biased perceptions, they’re using the selective perception bias. This influences the information they pay attention to, the problems they identify, and the alternatives they develop. Decision makers who seek out information that reaffirms their past choices and discount information that contradicts past judgments exhibit the confirmation bias (Links to an external site.) (Links to an external site.).
Do you believe that either of the two examples I have given could escalate into a dilemma? If this were to happen to you what could/would you do?
Yes, i believe that these examples of Escalation of commitment and Anchoring effect can create dilemman for the person making decision.
As we know that Dilemma is a difficult situation in which a person had to make a choice which are both not preferable or acceptable but person has to make a choice.
In this context, For example- A person is living in a house for 20 years and hold very dear memories and emotional attrachment to the house but the person is also facing financial crisis like debt also he has children living in city with their family . This created a dilemma for the person either he sell the house he holds dear and get money and pay debt or remain in the house and increase burden of debt just because he does not want to let go the house he holds very dear.
In this situation, It is escalation of commitment that he did not sell the house and increase the loss and debt over him. this is because the house is not giving anything to the person.
we can also see anchoring effect like An interviewer have position for sales executive. there are 4 candidates for the position. the first candidate comes for the interview which looks beautiful, talented and skilled so based on first impression the interviewer raise her bar for other 3 candidates. when other three candidate comes 2nd and 4th were average but 3rd candidate was more talented and skilled than first. also has experience in sales but not beautiful and fun loving like first.so this create dilemma that either he should choose first or 3rd first has looks, skills and talent but 3rd has experience and more skill and talent.
In first situation, i would sell the house because i would not want to suffer any loss or increase debt on myself. the rational decision is one which make us happy not make life miserable.
in second situation , i woud focus on requirement of job not looks so would make decision which best suits the job position.
Escalation of commitment occurs when a person invests capitals into a course of action that is...
1.) According to bounded rationality theory, people make the best decisions when their perceptions are "bounded" or framed by past experience. Group of answer choices True False 2.) One school of management thought states that organizational decisions and actions are influenced mainly by what attracts management's attention, rather than by the objective reality of the external or internal environment. Which of the following practices is closely associated with this argument? Group of answer choices stakeholder framing rational decision-making process perceptual...