Application of Decision Making: A Contingency Approach
It seems that all Dave accomplishes is making decisions. Every time he turns around, someone wants him to decide on one more thing. Just today the secretary came in and asked if she could reorder paper for the fax machine. Somehow that seemed like a decision he really did not need to deal with. If he could avoid those types of decisions, then when the foreman came in with the news of a major piece of equipment that needs repair, in which the repair bill will be almost as much as a new machine, Dave could focus more time and attention on the more complicated issues.
-After talking to Dave's boss, it appears that Dave decided to repair rather than replace the old fax machine in the past because he thought it would be cheaper to fix it than replace it. As it turns out, it has cost Dave three times as much to fix the machine or buy a new machine over the past two years than it would have cost to purchase a new one. Yet, Dave still persists in wanting to repair the old machine. This is an example of_________ .
A)bounded rationality
B)a programmed decision
C)ineffective decision- making
D)escalation of commitment

Question

Quizplus · Accepted Answer

Dave's insistence on repairing the old machine despite it costing more than purchasing a new one over time is an example of escalation of commitment, where individuals continue to invest in a decision despite evidence suggesting it might be wrong.

Application of Decision Making: a Contingency Approach