Escalating Commitment

Escalating commitment is an example of non rational decision making. Let's say you have previously invested a million dollars in a project-and it still isn't making money for your corporation. The balanced thing to do is write off that money and start investing in a more lucrative project. However, a lot of people would not make that decision. The most normally cited example of increasing commitment is President Lyndon Johnson's decisions during the Vietnam War in the 1960s: despite clear information presentation that intimidation North Vietnam was having no importance on ending the war; his decision was to increase the rate of bombing. As a manager, you must avoid the enticement to prove your original decision is right by throwing good funds into bad projects.