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Commitment (Psychology), Hindsight bias, Escalation of commitment, Self-justification, Sunk cost, Completion effect, Causal model theory, Sense-making
I conducted a 3 (Project Outcome: success, neutral, failure) x 3 (Information Amount: small, medium, large) factorial experiment in order to investigate whether observer's perception of escalation of commitment falls victim to hindsight bias. Subjects observed a decision-maker making an investment decision and persisting it in the face of negative information when the project was 50% completed and 90% completed. Later, subjects learned the project outcome and answered questions measuring their perception of the investment project and the decision-maker, as if they did not know the outcome already. Results confirmed my hypothesis. Participant's postdicted ratings of the chosen project and the decision-maker were influenced significantly by project outcome. Those who observed a successful outcome rated the chosen project as more likely to succeed and the decision-maker as a more qualified leader than those who observed neutral or failure investments. Subjects also reported that they would have continued to invest in the project under negative information if they were the decision-maker. Results provide insights to organizational leaders so they will show courage to guard against premature project termination.
Kong, Shuyao, "Hindsight bias magnifies escalation of commitment" (2013). Honors Project, Smith College, Northampton, MA.
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