When Success Breeds Failure: The Role of Self-Efficacy in Escalating Commitment to a Losing Course of Action

Summary The search for individual differences relevant to behavior in escalation situations has met with little success. Continuing the search, this study investigated self-efficacy judgments as a potentially important individual difference in escalating commitment to a losing course of action. Predictions derived from self-efficacy theory suggest that selfpercepts of high efficacy would exacerbate the economically irrational escalation bias whereas self-percepts of low efficacy would diminish it. These predictions were consistently supported in this laboratory study where business students responded to decision dilemmas in which funds had been committed to a failing course of action. Theoretical and practical implications of these findings are drawn for the escalation and self-efficacy literatures