Disentangling sunk-costs and completion proximity: The role of regulatory focus

Abstract

Why do some people escalate commitment to a project that is unlikely to succeed? Existing research shows that people tend to escalate when prior expenditures (e.g., sunk costs) are high, whereas other research suggests that people tend to escalate when a project nears completion, regardless of prior expenditures. In this paper, we argue that decision-makers have diverse goals driven by regulatory foci that represent alternative motivations for escalation. Specifically, people who regulate their behaviour towards achieving gains (i.e., a promotion focus) are influenced more strongly by proximity to project completion than those who focus on the presence or absence of losses (i.e., a preventio..