Escalation Bias: Does It Extend to Marketing?

J. Scott Armstrong (), Nicole Coviello and Barbara Safranek
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Nicole Coviello: University of Auckland
Barbara Safranek: S. G. Warburg & Co.

General Economics and Teaching from EconWPA

Abstract: Escalation bias implies that managers favor reinvestments in projects that are doing poorly over those doing well. We tested this implication in a marketing context by conducting experiments on advertising and product-design decisions. Each situation was varied to reflect either a long-term or a short-term decision. Besides these four conditions, we conducted three replications. We found little evidence of escalation bias by 365 subjects in the seven experimental comparisons.

Keywords: escalation bias; marketing (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2005-02-11
Note: Type of Document - pdf; pages: 11
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpgt:0502036

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