Arthur authorizes the expenditure of an additional $100 000 for the production of a new product despite mounting concerns that it will be unprofitable.The cost of the new product has already increased far beyond the initial plans and projections.Arthur's continuing support for this project illustrates the phenomenon of ________.
A)anchoring effect
B)intuition
C)overconfidence bias
D)hindsight bias
E)escalation of commitment

Question

Quizplus · Accepted Answer

Arthur's continuing commitment to a project that is becoming increasingly unprofitable despite mounting concerns is an example of escalation of commitment. This bias refers to the tendency to continue investing in a decision or project even when it becomes clear that it is not working out as planned, often due to sunk costs (resources already invested).

Arthur Authorizes the Expenditure of an Additional $100 000 for the Production