Escalation of Commitment

It is true that once someone does an MBA their language alters dramatically. Many of the things that he/she knew or assumed common sense now have new terminology and most of the times, these terminologies are even more daunting. But no matter how much this causes irritation and annoyance to people not accustomed to this lingo, it is really fun to use them appropriately.

Of the zillions of such terms, one which comes to mind is "Escalation of Commitment" or "Sunk Cost Fallacy". I guess by now you have no clue of what they mean. This means the phenomenon where people justify increased investment in a decision, based on the cumulative prior investment, despite new evidence suggesting that the decision was probably wrong. So what essentially happens, people repeatedly get evidence that something is terribly wrong but keep on believing that things will somehow work out and needs some more patience or some further effort. They fail to realize that no matter what is done its a lost cause and so better to just quit.

This phenomena can be seen in business, government, project management and gambling. It can also render itself in our day to day life where we are so attached to a decision emotionally that you think that more effort and time will make things better. And it takes something drastic to realize all of this and understand that you yourself fell into the sunk cost fallacy and never realized. All I can tell you is that it is not easy psychologically to recover from it and even if you do a part of you still tries to think what you could have done differently to make the effort a success...You wish you could go back in time and fix it up....Our minds!!!