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Can group decision-making mitigate propensity of escalating commitment?

Abstract

Escalation of commitment is a well-known investment trap, which is irrational from an economic point of view but inevitable due to psychological factors. Based on a role-playing experiment, this paper intends to analyze the impact of different effects of the prospect theory on the tendency of escalating commitment in different decision-making processes, and discusses whether certain decision-making processes can mitigate the tendency of escalating commitment. Our empirical results indicate that groups with prior individual consideration can make better decisions involving effects of the prospect theory than individuals and groups.

摘要

恶性增资现象广泛存在于各种组织结构中, 对社会的资源配置产生重大影响。 从经济学角度看, 恶性增资是非理性, 不应该发生, 但从决策者心理角度看, 有其产生的必然因素。 通过角色模拟实验, 分析前景理论的各效应在不同决策方式(个体决策、 直接集体决策和先个体后集体决策)下对恶性增资心理倾向的不同影响, 进而探讨采取特定的决策方式是否能够有效地对恶性增资倾向进行控制。 结论表明, 先个体后集体的决策方式可以较好地规避前景理论效应。

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Author information

Correspondence to Zhiyuan Liu.

Additional information

Translated and revised from Zhongguo gongye jingji 中国工业经济 (China Industrial Economy), 2007, (4): 13–20

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Keywords

  • escalation of commitment
  • group decision-making
  • prospect theory

关键词

  • 恶性增资
  • 集体决策
  • 前景理论