The Role of Mental Representations in Organizational Escalation of Commitment

We report the results of two experiments that test a cognitive explanation for escalation of commitment to a failing project. We examine whether an information-processing objective (i.e., purpose) influences the mental representations individuals construct to acquire and store information, which in turn, determine whether or not individuals recommend discontinuing a failing project. In Experiment 1, we find that participants assigned to make a project-continuation recommendation (relevant purpose) are more likely to remember critical threats to project viability than are participants assigned a specific, alternative purpose. Moreover, participants assigned a relevant purpose are more likely to recommend discontinuing the failing project than are participants assigned a specific, alternative purpose or a general purpose. A mediation analysis supports the theoretical model and suggests that cognitive factors are at least partially responsible for escalation of commitment. In Experiment 2, we test whether additional cognitive effort induced via a justification requirement reduces escalation of commitment. We find that requiring participants assigned a specific, alternative purpose or a general purpose to justify their recommendations does not reduce escalation. Results suggest that applyin