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A SEQUENTIAL LEARNING ANALYSIS OF DECISIONS IN ORGANIZATIONS TO ESCALATE INVESTMENTS DESPITE CONTINUING COSTS OR LOSSES

A SEQUENTIAL LEARNING ANALYSIS OF DECISIONS IN ORGANIZATIONS TO ESCALATE INVESTMENTS DESPITE... Reinforcement processes may underlie decisions frequently found in organizations to escalate investments of time, money, and other resources in strategies (e.g., product development, capital investment, plant expansion) that do not result in immediate reinforcers. Whereas cognitive biases have been proffered in previous explanations, the present analysis suggested that this persistence is a form of resistance to extinction arising from experiences with past investments that were variably reinforced. This explanation was examined in two experiments by varying the pattern of returns and losses subjects experienced for investment decisions prior to experiencing a series of losses. Consistent with the proposed explanation, two conditions resulted in higher levels of recommitment during continuous losses: (a) training using a variable schedule of partial reinforcement, and (b) no training on the task. Results indicate that behavior analysis can be used to understand and control situations in organizations that are prone to escalation, such as investments in the research and development of new product lines and extensions of further loans to customers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Applied Behavior Analysis Wiley

A SEQUENTIAL LEARNING ANALYSIS OF DECISIONS IN ORGANIZATIONS TO ESCALATE INVESTMENTS DESPITE CONTINUING COSTS OR LOSSES

Journal of Applied Behavior Analysis , Volume 25 (3) – Sep 1, 1992

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References (35)

Publisher
Wiley
Copyright
1992 Society for the Experimental Analysis of Behavior
ISSN
0021-8855
eISSN
1938-3703
DOI
10.1901/jaba.1992.25-561
Publisher site
See Article on Publisher Site

Abstract

Reinforcement processes may underlie decisions frequently found in organizations to escalate investments of time, money, and other resources in strategies (e.g., product development, capital investment, plant expansion) that do not result in immediate reinforcers. Whereas cognitive biases have been proffered in previous explanations, the present analysis suggested that this persistence is a form of resistance to extinction arising from experiences with past investments that were variably reinforced. This explanation was examined in two experiments by varying the pattern of returns and losses subjects experienced for investment decisions prior to experiencing a series of losses. Consistent with the proposed explanation, two conditions resulted in higher levels of recommitment during continuous losses: (a) training using a variable schedule of partial reinforcement, and (b) no training on the task. Results indicate that behavior analysis can be used to understand and control situations in organizations that are prone to escalation, such as investments in the research and development of new product lines and extensions of further loans to customers.

Journal

Journal of Applied Behavior AnalysisWiley

Published: Sep 1, 1992

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