Your cousin Vicky remodelled an old beach house last year. Vicky put on a new roof and sealed the driveway. This year, she needs to upgrade the electrical wiring and replace most of the plumbing. When asked why she isn't selling the house instead of putting in more money to renovate it, Vicky replies, "I already put a lot of money into the place!" This statement is an example of the ________type of judgement error.
A)availability
B)escalation of commitment
C)anchoring and adjustment
D)confirmation
E)overconfidence

Question

Quizplus · Accepted Answer

Vicky's statement suggests that she is falling victim to the escalation of commitment bias, meaning that she is investing more resources (money) into a project (the house) than is rational or justifiable, simply because she has already invested so much.

Your Cousin Vicky Remodelled an Old Beach House Last Year