What is escalation of commitment and what are the reasons why it occurs?

Escalation of commitment refers to the tendency to invest additional resources to an apparently failing course of action. Rather than accept sunk costs due to a past decision, the decision maker allows them to enter into future decisions in an attempt to recoup them. There are a number of reasons why it occurs including: dissonance reduction; a social norm that favours consistent behaviour by managers; decision makers might be motivated to not appear wasteful; the way that decision makers frame the problem once some resources have been sunk; personality, moods, and emotions can also affect escalation. People high on neuroticism and negative affectivity are less likely to escalate.