Adam M. Grant Quote
Escalation of commitment to a losing course of action. Over the past four decades, extensive research led by Staw shows that once people make an initial investment of time, energy, or resources, when it goes sour, they’re at risk for increasing their investment. Gamblers in the hole believe that if they just play one more hand of poker, they’ll be able to recover their losses or even win big. Struggling entrepreneurs think that if they just give their start-ups a little more sweat, they can turn it around. When an investment doesn’t pay off, even if the expected value is negative, we invest more. Economists explain this behavior using a concept known as the sunk cost fallacy: when estimating the value of a future investment, we have trouble ignoring what we’ve already invested in the past.
Escalation of commitment to a losing course of action. Over the past four decades, extensive research led by Staw shows that once people make an initial investment of time, energy, or resources, when it goes sour, they’re at risk for increasing their investment. Gamblers in the hole believe that if they just play one more hand of poker, they’ll be able to recover their losses or even win big. Struggling entrepreneurs think that if they just give their start-ups a little more sweat, they can turn it around. When an investment doesn’t pay off, even if the expected value is negative, we invest more. Economists explain this behavior using a concept known as the sunk cost fallacy: when estimating the value of a future investment, we have trouble ignoring what we’ve already invested in the past.