Purpose: The purpose of this study is to investigate whether, in the context of making a go/no-go decision regarding a failing new product, the use of a stopping rule and/or a new decision-maker would reduce the escalation of commitment (EOC). Design/methodology/approach: This study uses a classroom experiment design and uses logistic regression and a chi-square test to analyze its data. Findings: The findings show that both responsible and non-responsible participants are more likely to perceive the negative performance of a new product as less negative and believe that the goal for the product can be reached when there is a stopping rule and proximal negative feedback indicates a level of performance below but very close to it than when there is no stopping rule. Therefore, they are more likely to continue the failing new product, whether they are responsible for the product or not. However, non-responsible decision-makers are more likely than their responsible counterparts to discontinue the failing new product in the absence of a stopping rule. Research limitations/implications: This paper extends the theory of EOC by showing that the use of a stopping rule and/or a new decision-maker may not reduce EOC. Practical implications: This paper provides useful guidelines for managers on how to reduce EOC. Originality/value: The originality and value of this paper are found in the investigation of a situation in which the use of a stopping rule and/or a new decision-maker may not reduce the EOC.

No description available.

Purpose: The purpose of this paper is to investigate the effects of self-efficacy, process feedback and task complexity on decisions by managers to continue or discontinue a new product after receiving negative performance feedback. Design/methodology/approach: This paper uses a classroom experiment design and uses logistic regression and a chi-square test to analyze the data. Findings: The findings of this paper show that self-efficacy, process feedback and task complexity have not only main effects but also interactive effects on managers’ go or no-go decisions; further, the main effects are mediated by interactions. The effect of self-efficacy is moderated by process feedback and task complexity. Process feedback and task complexity also have an interactive effect on decisions about new products by decision-makers. Research limitations/implications: This paper extends the theory of escalation of commitment (EOC) by showing that self-efficacy, process feedback and task complexity can influence decision-makers’ go or no-go decisions after they have received negative performance feedback. Practical implications: This paper provides useful guidelines for managers on how to reduce the likelihood of EOC. Originality/value: The originality and value of this paper lie in its being the first to examine the effects of process feedback and task complexity on the EOC.

No description available.

The objective of the thesis is to advance the concept of learning by explicating the mechanisms contributing to knowledge accumulation and its transfer to new situations. On the basis of 44 case studies, the framework is refined to accurately capture the unique features and outcomes of experiential knowledge in acquisitions. Feedback from the performance of prior acquisitions was found to enrich representations of action-outcome linkages and modify procedures in search and valuation. Inferential transfer though depended on similar kinds of features emerging in subsequent decisions. Outcomes therefore reflected the integration of feedback processes and similarity judgments. From the case studies, a set of hypotheses was developed and their plausibility tested, using another data set on the acquisitions of 687 managers. The research finds that the performance of prior decisions and the similarity to prior experiences materially impact behaviour. Poor performance in prior, similar acquisitions led to a reduction in subsequent risk behaviour, illustrated by the extent of risk management and by the lessening of commitment to specific transactions. The impact of performance feedback was also extant in the similarity of choice to prior experiences. The results illustrate that although feedback shapes perceptions of likelihood and expected value, similarity judgments moderate the impact of prior performance on behaviour. Given the impact on acquisition behaviour, the research also illustrates that prior experiences do not necessarily increase performance. Adaptation from prior failures was not unambiguously linked to positive returns, suggesting limitations from feedback mechanisms. Rather, the extent and similarity of acquisition experience led to a reduction in the variability of performance. By providing a framework for selecting planning procedures, greater experience tended to reduce surprises post-acquisition.

<p>This dissertation focuses on managerial decision making, and specifically explores conditions wherein managers may increase their propensity to escalate commitment towards a failing project. Escalation researchers (e.g. Schmidt and Calantone, 2002) have listed four classes of factors that may impact a manager's propensity to escalate commitment towards a failing project, and have called for research into how exactly these factors impact escalation. In this dissertation, we explore two such factors. The first factor relates to the characteristics of the decision process used by firms to evaluate the project. Here, for example, researchers have looked at whether the manager was also involved in making decisions about the project in a prior period, and Boulding, Morgan and Staelin (1997) have shown that such manager's positive beliefs about the project (formed in a prior period) make a manager more likely to escalate commitment. The second factor relates to project characteristics. Here, for example, researchers have looked at whether or not the project relates to a product that is perceived as new, and Schmidt and Calantone (2002) have shown that managers are more likely to escalate commitment towards a failing project relating to a new product. </p><p>The first dissertation essay uses three experiments to examine how a hitherto unexplored characteristic of the decision process might lead to increasing escalation of commitment. Specifically, building off research into the illusion of control, we examine whether the opportunity to use managerial skill during the decision process makes a manager more willing to escalate commitment towards a failing project. We find that whenever managers act on cues that cause them to think they can use their managerial skill to control some outside factor (even though in reality they cannot), managers overestimate their ability to "control the odds" related to this outside factor. Such beliefs feed forward and lead managers to make suboptimal decisions about the overall project.</p><p>The second dissertation essay looks at how project characteristics might make a manager more (or less) likely to escalate commitment towards a failing project. We explore this issue in the hitherto unexplored real options setting. Real options have emerged as an important part of marketing strategy, and have been used to structure new product alliances, value customers etc. We run a controlled experiment and we examine whether differences in option-structure (which is a project characteristic) impact the propensity to make suboptimal option-exercise decisions. We find that managers are more likely to make suboptimal option-exercise decisions in the case of put options (vis. call options), and - as predicted by the endowment effect literature - this increased propensity to make a suboptimal decision is mediated by/ explained by the psychological ownership construct.</p> / Dissertation

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This dissertation presents results from three research projects, which extend available findings in the area of psychology of decision-making. It focuses on intuitive decision-making, the role of context and its relationship to decisional satisfaction and well-being. First research project addressed the possibility of generalisation of selected intuitive heuristics on non-financial decisions. Despite some methodological issues, results show that we invest time more easily than money, and intuitive heuristics cannot be automatically generalized to time decisions. Second research project focuses on context and its impact on decisional satisfaction. It shows decisional satisfaction can be influenced through decisional context. Eliminating escalation of commitment impacted resulting satisfaction on an experiential level, although cognitive level remained intact. Last research project focused on interindividual differences in relation to decisional satisfaction and well-being. Results show that higher competence influences decisional style, but it only higher self-confidence, perceived decisiveness, comes with higher decisional satisfaction and well-being. Data from this study do not allow to make judgment as to the direction of a causal relationship. Nevertheless, it opens many new questions in the...

軟體專案承諾升級現象發生時，可能會造成更多資源成本的投入，若投入更多的資源，而專案依然失敗，則會造成更多的浪費，是企業界最不希望看到的情形。本研究利用推敲可能性理論探討此現象，了解不同的說服方式如何影響受測者的決策過程。根據遇到專案的狀況，依照訊息訴求分成理性訴求與感性訴求的敘述方式，加入框架效應 (正向／負向) 以及訊息強度 (低／中／高) 兩變數，以自我責任作為調節變項進行探討，研究在不同情況敘述下，決策制定者接收專案訊息描述後其決策過程中的推敲可能性，以及推敲可能性與決策之間的關係。 研究發現如下： 1. 單一效果影響下，訊息強度中比起其他兩個強度較容易引起訊息接收者運用中央路徑思考。 2. 訊息訴求、訊息框架以及訊息強度會交互影響受測者推敲可能性，在正向框架下，訊息訴求與訊息強度對訊息接收者運用中央路徑做決策有顯著的交互作用。 3. 在訊息強度中與強的情況下訊息訴求與訊息框架對訊息接收者運用中央路徑做決策有顯著的交互作用。 4. 在感性訴求、正向框架與訊息強度強的訊息描述下，訊息接收者運用中央路徑思考時，較不容易做出承諾升級的決定。 5. 在自我責任調節下，則是感性訴求、負向框架與訊息強度弱的訊息描述，會引起訊息接收者運用中央路徑思考時，較不容易做出專案繼續的決策。 / Escalation of commitment is common in software project development. There are a few theories that have been used to explain this behavior, including the framing effect and self-responsibility. This study investigates the issue from the dual-path elaboration likelihood model (ELM) to examine how different persuasion routes may play roles in the decision process. An experiment was designed to study the effect of different descriptions of project status that may lead to different decision routes (central versus peripheral routes). The experiment design includes message appealing (rational vs emotional appealing), message strength (strong, medium and weak), and framing (positive vs. negative) as main variables and the responsibility as a moderator. The subject was asked to decide whether s/he would continue the project under a given scenario. Our results includes the following: 1. Message appealing, message framing, and message strength have significant interaction effect on the subject’s decision routes; 2. In positive framing, message appealing and strength has significant interaction effect on the use of the central route; 3. When message strength is medium or strong, message appealing and framing has significant interaction effect on the use of the central route; 4. Regarding to decision escalation, the likelihood of escalation is lower when the decision route is central (thinking) under the emotional appealing, positive framing, and strong message; 5. The likelihood of escalation is lower when the decision route is central under the emotional appealing, negative framing, and weak message description.