William invested in an initial public offering.After a month he lost 5 percent.After a year he lost 50 percent.After two years he lost 80 percent.William's decision to keep the investment is an example of ____.
A)political forces
B)intuition
C)escalation of commitment
D)rationality
E)satisficing

Question

Quizplus · Accepted Answer

William's decision to keep the investment despite consecutive losses is an example of escalation of commitment. It refers to the tendency of individuals to continue investing time, money or resources into a failing situation due to a prior investment of the same. This behavior is irrational because it does not consider the latest developments and leads to further losses.

William Invested in an Initial Public Offering