Equivocality and Escalation: A Replication and Preliminary Examination of Frustration1

An equivocality theory account of escalation of commitment was investigated using a computer simulated marketing scenario in a replication and extension of Hantula and DeNicolis Bragger (1999). Participants acted as marketing executives and invested money to promote sales of a new sneaker, and received high or low equivocality feedback from their investments for one phase and then received failure feedback in a second phase. Participants were videotaped throughout the experiment. Replicating previous research, participants receiving highly equivocal feedback invested a greater relative amount of money during failure than did those who received feedback low in equivocality. Furthermore, analyses of the videotapes for behaviors indicative of frustration showed that participants in both feedback groups displayed a greater degree of frustration while receiving failure feedback than during the first phase of the study. These data replicate and extend previous equivocality findings, but do not resolve the role of frustration in escalation unambiguously.     

Hyteresis and Uncertainty: The Effect of Uncertainty on Delays to Exit Decisions

The effects of feedback variability and the availability of information on exit decisions in a nonprofitable venture were investigated in a computer simulated marketing scenario. Half of subjects received feedback relatively low in variability and half of subjects received feedback substantially higher in variability. Half of subjects in each variability condition had the opportunity to purchase additional information regarding their investment. Subjects receiving feedback higher in variability delayed exit decisions longer, invested more often, and invested more resources than subjects receiving feedback lower in variability. Subjects with no opportunity to purchase information delayed exit decisions longer, invested more often, and invested more resources than subjects with the opportunity to purchase information. The results are consistent with Dixit's (1992) theory of uncertainty and hysteresis and indicate that an uncertain environment can affect whether a decision maker continues to invest when costs are higher than profits.     

The Effects of Feedback Equivocality on Escalation of Commitment: An Empirical Investigation of Decision Dilemma Theory1

The effects of feedback equivocality on escalation of commitment were examined in a laboratory study. Subjects had multiple opportunities to allocate money to market a software product. During the initial phase, subjects received feedback that was of either low or high equivocality. Half of the subjects in each equivocality level were given a standard by which to judge the feedback. In the second phase, all subjects received negative feedback. Consistent with Bowen's (1987) decision dilemma theory, subjects who received low equivocality feedback did not escalate allocations, and subjects who received high equivocal feedback escalated allocations. The presence of a standard or goal attenuated escalation. These results are consonant with a dynamic, temporally based account of escalation and are discussed in a synthesis of the literatures in behavior analysis, economics, forecasting, and psychology.     

Biased information processing in the escalation paradigm: information search and information evaluation as potential mediators of escalating commitment

Escalation of commitment denotes decision makers' increased reinvestment of resources in a losing course of action. Despite the relevance of this topic, little is known about how information is processed in escalation situations, that is, whether decision makers who receive negative outcome feedback on their initial decision search for and/or process information biasedly and whether these biases contribute to escalating commitment. Contrary to a widely cited study by E. J. Conlon and J. M. Parks (1987), in 3 experiments, the authors found that biases do not occur on the level of information search. Neither in a direct replication and extension of the original study with largely increased test power (Experiment 1) nor under methodologically improved conditions (Experiments 2 and 3) did decision makers responsible for failure differ from nonresponsible decision makers with regards to information search, and no selective search for information supporting the initial decision or voting for further reinvestment was observed. However, Experiments 3 and 4 show that the evaluation of the previously sought information is biased among participants who were responsible for initiating the course of action. Mediation analyses show that this evaluation bias in favor of reinvestment partially mediated the responsibility effect on escalation of commitment.     

The Influence of Compensation Method and Disclosure Level on Information Search Strategy and Escalation of Commitment

In this study we examined the extent to which compensation method and public disclosure influenced information search strategy and escalation of commitment. A laboratory experiment involving 182 student subjects employed a 3 (compensation: no-pay, salary, and contingent) by 2 (disclosure level: public and private) fully randomized, crossed design. Results show that in light of negative feedback concerning performance results of an investment portfolio, subjects whose initial allocation decisions were announced publicly reduced their search for prospective information, increased the search for retrospective information, and exhibited greater escalation of commitment than subjects who did not announce their initial investment strategy. The search for retrospective information and escalation of commitment was monotonically higher across the no-pay, salary, and contingent pay conditions respectively, while the search for prospective information decreased correspondingly. This study provides evidence that escalation of commitment is positively related to the search for retrospective information and negatively related to the search for prospective information. The results obtained from this experiment complement and extend prior work in the areas of accountability, cognitive dissonance and escalation of commitment. © 1997 by John Wiley & Sons, Ltd.     

Whose promises are worth more? How social status affects trust in promises

Promises are among the most widely used tools for increasing trust in social hierarchies; yet the effect of social status on trust in promises is unknown. Here we used a modified version of the Trust Game, in which participants, acting as Investors, were paired with Trustees of varying social status who were given the opportunity to promise (or not) to return at least half of the multiplied amount (i.e., 4 × the amount invested). No return feedback was provided. Participants invested more in partners who promised than those who did not or whose promise information was concealed. Importantly, in both lab-manipulated (Exps. 1–3: math-induced) and pre-existing (Exp. 4: university-based) hierarchies, participants invested more in promises given by high status than low status partners. Post-experiment measures suggest that this may be due to greater expectations of honesty for high status than low status others. Potential explanations and implications are discussed.     

Escalation behavior in domains related and unrelated to decision makers' academic background

Based on Staw and Ross's (1987) analysis of escalation behavior it was hypothesized that (a) those who are involved with projects related to their academic background will tend to persist in a losing course of action and to judge the situation as reversible more than those who have to make decisions in areas unrelated to their specialty; (b) providing information that the loss is irreversible will decrease the tendency to invest additional resources. A secondary goal of the study was to examine whether there would be any difference in sunk cost decisions when the resource invested is financial as compared to time. Using a 2 × 2 × 2 factorial design, a total of 296 students were given eight different scenarios in which relatedness of decision subject-matter to academic background, reversibility of the situation, and type of resources (time or money) were the independent variables, and commitment to a course of action was the dependent variable. The results confirmed the hypotheses. No significant main effect for type of resources (time vs. money) was found. Theoretical and practical implications of the results are discussed.The authors thank Dr. Michael Hoffman for his valuable contribution in preparing this paper.     

Hindsight bias doesn't always come easy: causal models, cognitive effort, and creeping determinism

Creeping determinism, a form of hindsight bias, refers to people's hindsight perceptions of events as being determined or inevitable. This article proposes, on the basis of a causal-model theory of creeping determinism, that the underlying processes are effortful, and hence creeping determinism should disappear when individuals lack the cognitive resources to make sense of an outcome. In Experiments 1 and 2, participants were asked to read a scenario while they were under either low or high processing load. Participants who had the cognitive resources to make sense of the outcome perceived it as more probable and necessary than did participants under high processing load or participants who did not receive outcome information. Experiment 3 was designed to separate 2 postulated subprocesses and showed that the attenuating effect of processing load on hindsight bias is not due to a disruption of the retrieval of potential causal antecedents but to a disruption of their evaluation. Together the 3 experiments show that the processes underlying creeping determinism are effortful, and they highlight the crucial role of causal reasoning in the perception of past events.     

Buyer's remorse or missed opportunity? Differential regrets for material and experiential purchases

Previous research has established that experiential purchases tend to yield greater enduring satisfaction than material purchases. The present work suggests that this difference in satisfaction is paralleled by a tendency for material and experiential purchases to differ in the types of regrets they elicit. In 5 studies, we find that people's material purchase decisions are more likely to generate regrets of action (buyer's remorse) and their experiential purchase decisions are more likely to lead to regrets of inaction (missed opportunities). These results were not attributable to differences in the desirability of or satisfaction provided by the two purchase types. Demonstrating the robustness of this effect, we found that focusing participants on the material versus experiential properties of the very same purchase was enough to shift its dominant type of regret. This pattern of regret is driven by the tendency for experiences to be seen as more singular--less interchangeable--than material purchases; interchangeable goods tend to yield regrets of action, whereas singular goods tend to yield regrets of inaction.     

Indulgence as self‐reward for prior shopping restraint: A justification‐based mechanism

This research investigates the effects of refraining from a purchase temptation at one point in time on choices made at a subsequent opportunity to purchase or consume a tempting product. Four experiments involving scenarios and real decisions demonstrate that the salience of restraint at a prior impulse buying opportunity causes consumers to reward themselves subsequently by choosing indulgence over non-indulgence. We show that indulgence is likely to increase only when prior restraint is salient and hence can be used as a justification. As expected, an index of reasons for vs. against buying mediates the relationship between prior impulse purchase decision and indulgent choice. In further support of the mechanism, we find that prior indulgence can have the same effect as prior restraint, if the prior indulgence is made justifiable. Finally, we show that prior shopping restraint can increase indulgence without a corresponding increase in self-esteem. These findings extend our understanding of self-regulation and demonstrate that everyday consumer decisions such as responses to impulse buying opportunities can have consequential downstream effects.     

Learning from experience in nonlinear environments: Evidence from a competition scenario

We test people’s ability to learn to estimate a criterion (probability of success in a competition scenario) that requires aggregating information in a nonlinear manner. The learning environments faced by experimental participants are kind in that they are characterized by immediate, accurate feedback involving either naturalistic outcomes (information on winning and/or ranking) or the normatively correct probabilities. We find no evidence of learning from the former and modest learning from the latter, except that a group of participants endowed with a memory aid performed substantially better. However, when the task is restructured such that information should be aggregated in a linear fashion, participants learn to make more accurate assessments. Our experiments highlight the important role played by prior beliefs in learning tasks, the default status of linear aggregation in many inferential judgments, and the difficulty of learning in nonlinear environments even in the presence of veridical feedback.     

Positive and negative recency effects in retirement savings decisions

Retirement savings decisions can be influenced by the fund composition of the retirement savings plan. In 2 experiments, strong composition effects were observed, with a larger percentage of resources being invested in stock funds when more stock than bond funds were offered. Although participants changed their allocations repeatedly, the opportunity to learn did not alter the composition effects. Learning processes led to positive and negative recency effects as well, providing evidence that allocations were strongly influenced by the recent performance of the different allocation options. Two learning models were tested to explain these learning processes. The first, a local adaptation learning model, assumes that people change their behavior on the basis of recent experience, whereas the second, a reinforcement learning model, assumes that decisions are made on the basis of the totality of accumulated experience. The local adaptation model was more accurate in predicting allocation decisions, in explaining positive and negative recency effects, and in showing why composition effects are not overcome by learning.     

Weighing the past and the future in decision making

Prior irreversible investments of money, time, or effort referred to as sunk costs frequently lead to decisions to continue a chosen course of action despite that this is irrational. With the aim of demonstrating that such escalation of commitment is a special case of a more general phenomenon, two experiments were carried out employing undergraduates as participants. Experiment 1 showed for fictitious personal and business investment scenarios that both prior losses and gains (sunk outcomes) affected choices to continue or discontinue the investment. In Experiment 2 the effect of sunk outcomes was reduced although not eliminated by a monetary bonus that in one condition depended on the future outcomes of the second gamble in two-stage gambles, in another condition on the future returns in personal investment scenarios. In support of a more inclusive theory subsuming escalation of commitment, the decisions were affected by both past and future outcomes and both gains and losses.     

Justification and the Processing of Information

This study explores, within the context of escalating commitment, how ambiguous information affects decision making. By analyzing subjects' looking times and allocation decisions, we examined the process by which individuals abstract and use information to arrive at their decisions. We found that subjects spent more time processing ambiguous information than they did either purely optimistic or purely pessimistic information. This tendency to process ambiguous information longer increased when the decision maker was not exonerated from blame for the failure of an original decision; presented with ambiguous information, nonex-onerated subjects also made smaller allocations than did exonerated subjects. In this study, the predominant effect of felt responsibility on allocations was withdrawal rather than escalation. Our results suggest that the ambiguity of information about the future plays an important role in escalation and that the combination of responsibility and failure may affect allocations only when the prospective information is ambiguous.     

Interpreting the uninterpretable: The effect of self-esteem on the interpretation of meaningless feedback

People often seek out and retain positive information about themselves via self-enhancement processes. Under other circumstances, they seek out and retain self-confirmatory information via self-verification processes. Research on both of these self-evaluation processes has been based heavily on domains such as social skills, in which people have a large database of prior information that presumably influences the way in which incoming self-relevant information is interpreted. In the present research, participants were asked to evaluate themselves on a set of imaginary "pseudotraits" to investigate how self-esteem influences the self-evaluation process when prior information is unavailable. Participants who had been identified through pre-testing as either high or low in self-esteem received false feedback on five pseudotraits (e.g., "casortic"), after which they evaluated the favorability of this feedback. High self-esteem participants tended to view their feedback as favorable, whereas low self-esteem participants did not.     

On self-referencing differences in judgment and choice

Compared to judgment, choice is argued to elicit more self-referent processing and thereby produce greater subsequent recall of evaluated information. This response mode effect is shown to be dependent upon sufficient visualization to overcome the use of heuristic processing during choice. When visualizing prior to the task, choice leads to increased thinking about personal consumption occasions relative to judgment, leading to enhanced recall of vivid (vs. non-vivid) attributes. This proposed interaction of task and visualization was found in two experiments that assessed incidental recall following a choice or judgment task. In experiment 1, participants recalled more vivid product attribute information after choosing between options than after rating each option separately, but only when instructed to visualize during evaluation. To eliminate a comparison-based explanation of this effect, a second experiment was conducted that presented only one option in each category. Participants who evaluated their intention to purchase the option (a judgment equivalent of choice) demonstrated greater recall of vivid product attribute information than did participants who rated their liking for the option, and this recall difference was again moderated by instructions to visualize.     

Information selectivity in decision making by younger and older adults

Past research has demonstrated that older adults are more likely than younger adults to exhibit information selectivity in decision making. Two alternative explanations have been proposed to account for this age difference. One explanation attributes the increase in information selectivity to older adults' reliance on prior knowledge, whereas the other explanation suggests that it reflects reduced information processing capacity. The aim of this research was to explore the latter explanation by controlling for experiential factors and varying the cognitive demands involved in decision making. Specifically, participants were faced with unfamiliar decision problems, and had to base their decisions on the available information in order to reach a desired goal. In Experiment 1 younger and older participants were required to play a game involving chance. The outcome payoff was varied between three conditions (approach, avoidance, and control). The results indicated that both the younger and the older participants based their decisions on payoff, though the older participants did so to a lesser extent. In Experiment 2 younger and older participants performed a similar decision task but with higher cognitive demands. Specifically, the decision‐making task included two dimensions of information, outcome probability and outcome payoff. The results showed that the younger participants based their decisions on probability and payoff whereas the older participants based their decisions on probability alone. In Experiment 3 younger and older participants made decisions in a sale context and received instructional cue to incorporate payoff information in their decisions. As before, the younger participants utilized probability and payoff, whereas the older participants based their decisions only on probability information. The findings are discussed in terms of age differences in information‐processing capacity, metacognition, motivation, and goal‐setting.     

Self-esteem threat combined with exposure to thin media images leads to body image compensatory self-enhancement

This study examined the effect of a self-esteem threat combined with exposure to thin images on body image (BI) satisfaction and investment. Female participants (N = 94) received a self-esteem threat consisting of false failure feedback or received false success feedback on an intellectual task allegedly highly predictive of academic and professional success. They then viewed media images featuring thin models or products. After viewing thin models, women who had received failure feedback declared themselves more satisfied about their appearance and less invested in it than did women who had received success feedback. These results suggest that exposure to the thin ideal may inspire women experiencing self-esteem threats to use appearance as an alternative source of worth, thus maintaining their global esteem through BI compensatory self-enhancement. Potential long-term implications of this strategy, such as a paradoxical increase in BI investment and the development of eating pathology, are discussed.     

The Role of Concurrent Feedback in Learning to Walk Through Sliding Doors

Concurrent feedback is defined as information about performance given to participants during the execution of an action. This article investigates whether concurrent feedback is beneficial or detrimental to the learning of an ecologically relevant task. Eighteen participants were asked to walk through a virtual corridor and they practiced over 1110 trials to adjust their walking speed so as to pass through sliding doors that opened and closed at a frequency of 1 Hz. Concurrent feedback informed them about the possible need to accelerate or decelerate. Performance of participants who received concurrent feedback on 66% of the practice trials (on average) did not differ significantly from performance of participants who did not receive concurrent feedback. Furthermore, participants of both of these groups significantly outperformed participants who received concurrent feedback on all practice trials. These results are discussed in relation to the perceptual-motor mechanisms that underlie the control of the action. Also discussed are implications for future research, including the use of self-controlled feedback and the use of multisensory training programs.