Camerer, Colin F. and Weber, Roberto A. (1999) The econometrics and behavioral economics of escalation of commitment: a re-examination of Staw and Hoang’s NBA data. Journal of Economic Behavior & Organization, 39 (1). pp. 59-82. ISSN 0167-2681. http://resolver.caltech.edu/CaltechAUTHORS:20110209-083058323
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We examine the phenomenon of escalation from an economist’s perspective, emphasizing explanations which do not rule out rational behavior on the part of firms or agents. We argue that escalation cannot be established as a separate phenomenon unless these possible alternative explanations are properly accounted for. We present Staw and Hoang’s (1995) study of NBA data as an instance of where evidence of escalation might be overturned upon more careful analysis. After performing several tests of our alternative explanations, we find that evidence of escalation persists, although it is weaker both in duration and magnitude.
|Additional Information:||© 1999 Elsevier Science B.V. Received 21 August 1997; revised 16 September 1998; accepted 28 September 1998. Available online 17 June 1999. We thank Amanda Rosenberg and Gail Nash for data entry, and participants at the Psychology–Economics Conference, Vancouver BC (June 6–7 1997), Linda Babcock, Max Bazerman, Richard Day, David Grether, Chip Heath, Keith Murnighan, Tom Ross, Barry Staw, Keith Weigelt and an anonymous referee for helpful comments.|
|Subject Keywords:||Escalation; Sunk cost fallacy; Behavioral economics|
|Classification Code:||JEL classification codes: D23|
|Official Citation:||Colin F. Camerer, Roberto A. Weber, The econometrics and behavioral economics of escalation of commitment: a re-examination of Staw and Hoang's NBA data, Journal of Economic Behavior & Organization, Volume 39, Issue 1, May 1999, Pages 59-82, ISSN 0167-2681, DOI: 10.1016/S0167-2681(99)00026-8. (http://www.sciencedirect.com/science/article/B6V8F-3WRBDPH-5/2/ca83d13c51ed42121aba19e6e16b2605)|
|Usage Policy:||No commercial reproduction, distribution, display or performance rights in this work are provided.|
|Deposited By:||Tony Diaz|
|Deposited On:||10 Feb 2011 02:54|
|Last Modified:||26 Dec 2012 12:54|
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