Escalation of commitment in innovative R&D project: A new perspective

Many people has seen it: the R&D project that takes on such life of its own that it becomes virtually impossible to stop even though all signs point to its ultimate failure. The escalation of commitment in innovative R&D project is even more serious. Based on bounded rationality assumption, individual decision maker and decision group are taken as different unit of analysis and tries to explain why innovative R&D project is hard to terminate. In true life, individual decision is a complex process which is affects by emotional and irrational factors. The cognitive and heuristics bias involving representativeness, anchoring, overconfidence, loss aversion, and regret aversion influence man's decision from different aspect and extent. In group decision, diffused responsibility makes individual group members to pursue private interests by the way of the success of innovative R&D project and they cannot be held responsible for the failure of a group decision. Persuasive arguments make individuals afraid to speak up when they disagree. Thus, group polarization is engendered and a risky decision-continue the project- is made. Individual biased initial judgment and group risk polarization form and strengthen escalation of commitment.