Six months after starting an event management company,Dynamo,with a partner,Jenny finds that projections of revenue are significantly lower and the future projections are also bleak.To alleviate the situation,Jenny invests another $25,000 from her savings into the venture.She may be affected by a(n):
A) overconfidence bias.
B) confirmation bias.
C) escalation of commitment bias.
D) hindsight bias.
E) framing bias.

Question

Quizplus · Accepted Answer

Jenny's decision to invest more money into the venture despite bleak projections is an example of escalation of commitment bias. This bias refers to the tendency to continue investing in a failing endeavor in the hope of turning it around, even when the evidence suggests that it is unlikely to succeed.

Six Months After Starting an Event Management Company,Dynamo,with a Partner,Jenny