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The econometrics and behavioral economics of escalation of commitment: A re-examination of Staw & Hoang's NBA data

Camerer, Colin F. and Weber, Roberto A. (1998) The econometrics and behavioral economics of escalation of commitment: A re-examination of Staw & Hoang's NBA data. Social Science Working Paper, 1043. California Institute of Technology , Pasadena, CA. (Unpublished) http://resolver.caltech.edu/CaltechAUTHORS:20170811-142521643

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Abstract

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.


Item Type:Report or Paper (Working Paper)
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http://resolver.caltech.edu/CaltechAUTHORS:20110209-083058323Related ItemPublished Version
ORCID:
AuthorORCID
Camerer, Colin F.0000-0003-4049-1871
Additional Information: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. Published as Camerer, C.F., & Weber, R.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), 59-82.
Group:Social Science Working Papers
Subject Keywords:Escalation; Sunk cost fallacy; Behavioral economics
Classification Code:JEL: D23
Record Number:CaltechAUTHORS:20170811-142521643
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20170811-142521643
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:80306
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:11 Aug 2017 23:38
Last Modified:11 Aug 2017 23:38

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