Question

Your company has entered into a​ five-year lease for a building for your​ business, but it now looks as if it will cost up to half a million dollars to bring the facility up to code and to your operating standards. Rather than attempting to break the lease and find a better​ location, the facilities committee is focusing on trying to salvage this​ deal, even though it looks like a bad decision. Which is the MOST LIKELY behavioral aspect you are​ facing?

Answer 1

Answer:

Escalation of commitment or commitment bias.

Explanation:

Escalation of commitment is a human behavior pattern in which an individual or group facing increasingly negative outcomes from a decision, action, or investment nevertheless continues the behavior instead of altering course; meaning the individual or business continues to invest additional resources in an apparently losing proposition, influenced by effort, money, and time already invested. The group/individual maintains behaviors that are irrational, but align with previous decisions and actions. Economists and behavioral scientists use a related term, sunk-cost fallacy, to describe the justification of increased investment of money or effort in a decision, based on the cumulative prior investment ("sunk cost") despite new evidence suggesting that the future cost of continuing the behavior outweighs the expected benefit.