Exploring the determinants of reinvestment decisions: Sense of personal responsibility, preferences, and loss framing.

ABSTRACT: Two potentially costly errors are common in sequential investment decisions: sticking too long to a failing course of action (escalation of commitment), and abandoning a successful course of action prematurely. Past research has mostly focused on escalation of commitment, and identified three critical determinants: personal responsibility, preferences for prior decisions, and decision framing. We demonstrate in three studies using an incentivized poker inspired task that these determinants of escalation reliably lead decision makers to keep investing even when real money is on the line. We observed in Experiments 1, 2 and 3 that reinvestments were more likely when decision makers were personally responsible for prior decisions. This likelihood was also increased when the decision makers ha

SUBMITTER: Doerflinger JT 

PROVIDER: S-EPMC9878561 | biostudies-literature | 2022

REPOSITORIES: biostudies-literature