The management team of a toy company decided that they would begin producing children's clothes. After six months, the company had made little money on its new clothing line. They could not compete with other children's clothing lines. Still, the management team decided to spend more money marketing their new line. This is an example of escalation of commitment.

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Escalation of commitment is the tendency to continue investing in a failing project or decision, despite evidence suggesting it will not be profitable. In this scenario, the management team's decision to continue spending more money on marketing their new clothing line, despite making little money and facing competition, is an example of escalation of commitment.

The Management Team of a Toy Company Decided That They