Decision-Making Modes and Decision-Making Biases. Improving decisions in escalation of commitment situations by triggering considerations

Abstract

Escalation of commitment is a persistent problem in managerial decision-making. The purpose of this study is an experimental test of an alternative debiasing strategy with regard to the continuation of failing, but also of successful projects. According to the dual processing approach to decision-making, biases are linked to operating in a spontaneous low-effort cognitive mode. Thus, one remedy is getting decision-makers to shift in an elaborate mode of thinking. This experimental study investigated, whether calling for an explicit evaluation of benefits and risks before actors make their decision improves decision-making about a project's continuation in the sense that sunk costs are less relevant and available economic information is more relevant for the decision. Effects of triggering considered decision-making on successful and unsuccessful projects are investigated. The findings indicate substantial differences between considered and spontaneous decisions. Decision-makers who intensely consider their decisions actually make worse decisions.

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