Escalation of commitment refers to the circumstance that a decision taken is being held on despite of negative feedback. Within this thesis, the focus is on managerial decisions about investments that are continued despite poor prospects of achieving set objectives and the possibility of abandonment. The paper addresses cognitive escalation factors as a cause of escalation of commitment and presents the state of the literature and research on countermeasures through behavioural controlling in the company context.
Table of Contents
- 1 Introduction
- 1.1 Escalation of commitment as a problem of rationality assurance
- 1.2 Objective and approach of the thesis
- 2 Controlling, rationality and human behaviour: Theoretical foundations
- 2.1 Introduction to rationality in the company context
- 2.2 Rationality assurance and behavioural orientation in controlling
- 2.3 Human rational behaviour in theory
- 3 Escalation of commitment and cognitive biases as escalation factors
- 3.1 The escalation of commitment phenomenon
- 3.2 Cognitive biases as escalation factors
- 3.2.1 Cognitive biases as unconscious decision influences
- 3.2.2 Self-justification
- 3.2.3 Prospect theory and decision framing
- 3.2.4 Sunk cost effect and mental accounting
- 3.2.5 Optimism bias, overconfidence, and illusion of control
- 3.2.6 Confirmation and perception biases
- 4 Counteraction through behavioural controlling
- 4.1 Counteracting rationality-restricting escalation factors
- 4.2 Controlling-guided decision-making processes
- 4.3 Adapting the decision environment: Decision-making in groups
- 4.4 Changing the decision environment: Management reporting
- 5 Limitations
- 6 Conclusion
Objectives and Key Themes
This thesis aims to explore the phenomenon of escalation of commitment, focusing on the role of cognitive biases as contributing factors and examining methods of counteraction through behavioral controlling. It investigates theoretical foundations of rationality in controlling and how human behavior impacts decision-making processes. The study also analyzes how controlling mechanisms can be adapted to mitigate the negative effects of escalation of commitment.
- Escalation of commitment as a rationality problem
- Cognitive biases influencing escalation of commitment
- Behavioral controlling as a counteraction strategy
- Theoretical foundations of rationality in organizational contexts
- Analysis of effective decision-making processes within controlling frameworks
Chapter Summaries
1 Introduction: This introductory chapter sets the stage for the thesis by defining escalation of commitment and establishing its significance as a challenge to rational decision-making within organizations. It outlines the thesis's objective and approach, highlighting the focus on cognitive biases and behavioral controlling mechanisms. The chapter frames the problem, establishing the importance of understanding and mitigating the effects of escalation of commitment on organizational effectiveness and decision-making quality. It clearly states the scope and limitations of the research conducted in the thesis.
2 Controlling, rationality and human behaviour: Theoretical foundations: This chapter lays the groundwork for the subsequent analysis by examining existing theories of rationality and their relevance within the context of organizational controlling. It delves into different models of human behavior, providing a theoretical framework for understanding how cognitive biases impact decision-making within a controlled environment. The chapter differentiates between various concepts of rationality and explores how these theoretical underpinnings inform the understanding of escalation of commitment.
3 Escalation of commitment and cognitive biases as escalation factors: This chapter delves into the core phenomenon of escalation of commitment and the cognitive biases that fuel this behavior. It systematically examines various cognitive biases – such as self-justification, prospect theory, the sunk cost effect, optimism bias, and confirmation biases – explaining their individual influence on decision-making and how they collectively contribute to escalation. Each bias is explored in detail, with examples demonstrating their real-world impact on commitment escalation in business contexts.
4 Counteraction through behavioural controlling: This chapter explores potential strategies to counteract escalation of commitment through behavioral controlling. It presents various methods for managing and mitigating the impact of rationality-restricting escalation factors. It examines several specific approaches such as fostering group decision-making processes, and adjusting management reporting systems to help avoid escalation of commitment. This chapter proposes practical and adaptable countermeasures to prevent or reduce this phenomenon in organizations, highlighting the importance of a proactive approach to decision-making processes.
Keywords
Escalation of commitment, cognitive biases, behavioral controlling, rationality, decision-making, organizational behavior, prospect theory, sunk cost effect, management reporting, group decision-making.
Frequently Asked Questions about "Escalation of Commitment: A Behavioral Controlling Perspective"
What is the main topic of this thesis?
This thesis explores the phenomenon of escalation of commitment, focusing on the role of cognitive biases as contributing factors and examining methods of counteraction through behavioral controlling. It investigates theoretical foundations of rationality in controlling and how human behavior impacts decision-making processes. The study analyzes how controlling mechanisms can be adapted to mitigate the negative effects of escalation of commitment.
What are the key themes explored in the thesis?
Key themes include escalation of commitment as a rationality problem, the influence of cognitive biases (such as self-justification, prospect theory, sunk cost effect, optimism bias, and confirmation bias) on escalation, behavioral controlling as a counteraction strategy, theoretical foundations of rationality in organizational contexts, and analysis of effective decision-making processes within controlling frameworks.
What are the objectives of this research?
The main objective is to understand escalation of commitment, identify the contributing cognitive biases, and propose effective countermeasures through behavioral controlling. The research aims to provide a theoretical framework for understanding how human behavior affects decision-making within organizations and to offer practical strategies for improving decision-making processes.
What are the chapter summaries?
Chapter 1 (Introduction) sets the stage, defining escalation of commitment and outlining the thesis's objective and approach. Chapter 2 (Theoretical Foundations) examines theories of rationality and human behavior in organizational controlling. Chapter 3 (Escalation Factors) delves into the phenomenon of escalation of commitment and the various cognitive biases that contribute to it. Chapter 4 (Counteraction) explores strategies to counteract escalation of commitment through behavioral controlling, including adjusting decision-making processes and management reporting.
What cognitive biases are discussed in the thesis?
The thesis discusses several cognitive biases, including self-justification, those stemming from prospect theory, the sunk cost effect, optimism bias, overconfidence, illusion of control, and confirmation biases. Each bias is analyzed in detail regarding its contribution to escalation of commitment.
What are the proposed counteraction strategies?
The thesis proposes counteraction strategies through behavioral controlling, focusing on adapting decision-making processes (e.g., group decision-making) and improving management reporting systems to mitigate the negative effects of escalation of commitment. These aim to create a more rational and effective decision-making environment.
What are the limitations of the research?
The thesis mentions limitations in a dedicated chapter (Chapter 5), though the specific limitations aren't detailed in the provided preview.
What are the key words associated with this thesis?
Key words include: Escalation of commitment, cognitive biases, behavioral controlling, rationality, decision-making, organizational behavior, prospect theory, sunk cost effect, management reporting, group decision-making.
What is the overall contribution of this thesis?
The thesis contributes to the understanding of escalation of commitment by systematically analyzing the role of cognitive biases and proposing practical, behavioral controlling strategies to counteract this phenomenon. It bridges theoretical understanding of rationality and human behavior with practical implications for improving organizational decision-making.
Where can I find the full thesis?
The provided text is a preview. The location of the full thesis is not specified.
- Quote paper
- Saskia Spang (Author), 2021, Escalation of Commitment. Cognitive Escalation Factors and Counteraction through Behavioural Controlling, Munich, GRIN Verlag, https://www.grin.com/document/1130806
