Black chess pieces advance on a single surviving white knight piece

Faced with a bad decision, how do you quit before it is too late?

I’m a film buff, and there’s one scene in the film Captain Philips that has stuck with me since I first saw the movie in 2013: despite obvious signs that a hostage situation will end badly, the leader of the kidnappers declares, “I came too far, I can’t give up!”

Essentially, he was unable to de-escalate from a losing course of action.

Why is it so hard to walk away from a bad decision?

Barry M. Staw is the Lorraine Tyson Mitchell Professor in Leadership and Communication, and it was he who first introduced the concept of escalation of commitment in his 1976 paper, “Knee-Deep in the Big Muddy: A Study of Escalating Commitment to a Chosen Course of Action.” Escalation of commitment is the “tendency to invest additional resources in an apparently losing proposition, influenced by effort, money, and time already invested.” This phenomenon can occur for any type of situation, from queuing for a seat in a popular restaurant to major political events such as the Bay of Pigs, Watergate, or America’s involvement in the Vietnam War.

In Dmitriy Chulkov and Mayur Desai’s meta-analysis of research in escalation of commitment, they identify numerous theories associated with our inability to simply walk away from bad decisions and investments. These are sorted into the rational and the irrational.

Rational escalation involves protecting reputations and incentives for agents (agency theory), investing in high-risk, high-reward projects (bandit theory), and “continuing a project…due to various real options associated with [it]” (real option theory).

Irrational escalation, on the other hand, involves negative framing of decisions (prospect theory), making excuses for personal responsibility (self-justification theory), and pursuing project that are simultaneously appealing and unappealing for reasons such as sunk costs and goal proximity (approach avoidance theory).

Several authors have explored the phenomena of escalation of commitment, through both real-life case studies and controlled experiments. Barry Staw and Ha Hoang’s study on sunk costs in the National Basketball Association reveals that teams played and retained their most costly drafted players even after taking into account factors such as on-court performance, injuries, and trade status. David Marcum and Steven Smith’s book Egonomics: What Makes Ego Our Greatest Asset (or Most Expensive Liability) describes a “dollar auction” experiment in which two groups of people bid to win a dollar. As bidding rises, individuals who felt their ego was threatened let their bids escalate higher in almost every instance.

Indeed, ego lies at the center of the issue.

Adam Grant, tenured professor at Wharton and author of Give and Take: A Revolutionary Approach to Success, reports ego threat (not wanting to be seen as a failure) as the main culprit behind escalating behavior. As such, he suggests minimizing the risk of escalation by shifting attention away from yourself (or whoever’s at the center of the issue) and considering the impact of a decision on others for a more balanced assessment. He also warns against compliments, as these can potentially inflate egos and promote escalation of behavior.

How do we learn to walk away?

In the article, “Transition to IS Project De-Escalation: An Exploration into Management Executives’ Influence Behaviors,” Gary Pan and Shan Pan highlight a comprehensive list of activities that could potentially help to promote de-escalation behavior in a failing project. Here are a few highlights:

・Redefine the problem and consider alternatives
・Change the top management or project leader, then reassess the situation
・Appeal to external stakeholders to incite action
・Publicize resource limits, costs, and risks to stop support for a failing project
・Conduct regular project evaluations
・Set minimum targets to minimize extensions
・Separate responsibility for initiating and evaluating a project
・Include both skeptics and believers in project teams to prevent warning signs from being ignored

By understanding why we commit to a losing course of action and how we can perform specific activities to promote de-escalation, we can hopefully make better decisions and improve our chances of walking away from the bad ones.

As the saying goes, “Knowing is half the battle.”