the escalation of commitment; the psychology of entrapment; the sunk cost effect; and the too-much-invested-to-quit syndrome.
The issue of escalation had earlier been explained as being the result of psychological factors that allowed decision-makers to think and act irrationally; that is, behavior unexplained either by objective circumstances or by customary decision-making standards. Some researchers maintain that rationality is not an issue because decision-makers are known, once apprised of economic realities, to attend to their responsibilities. Alternatively, other researchers believe there are a multiplicity of psychological and social factors involved, including public embarrassment and the admission of failure. Rationality, therefore, or its privation need not either draw excessive attention or distract from the central phenomenon of the tendency of individuals and organizations to persist in failing courses of action. Although there are many determinants which may explain this tendency, there are four principal classes; project determinants, psychological determinants, social determinants, and organizational determinants.
The variables of each project are obvious determinants for the persistence of courses of action. Researchers have shown that commitment is affected: by whether a setback is judged to be due to a permanent or temporary problem; by whether further investment is likely to be efficacious; by how large a goal or payoff may result from continued investment; by future expenditures or costs necessary to achieve a project's payoff; and by the number of times previous commitments have failed to yield returns. Some project variables, however, are less obvious causes of persistence, especially where the interval between expenditures and economic benefits is extended, or where projects have little salvage value and involve substantial closing costs if terminated midstream, which was the case in World Fair Expo 86...