When Managers Committed to an Incorrect Course of Action Increase

question 41

Multiple Choice

When managers committed to an incorrect course of action increase their commitment to this action even as its limitations become manifest, this is known as

• A) de-escalation of commitment.
• B) diseconomies of scale.
• C) escalation of commitment.
• D) economies of scale.

---

Definitions:

Adverse Selection

A situation in which sellers have information that buyers do not (or vice versa) leading to transactions that favor the party with more information.

Malpractice Insurance

Insurance that provides coverage to physicians and other medical professionals for liability arising from disputed services that result in a patient's injury or death.

Airbags

Safety devices in vehicles designed to inflate rapidly in the event of a collision to prevent occupants from striking interior objects or being ejected.

Asymmetric Information

A situation in which one party in a transaction has more or better information than the other party, often leading to an imbalance in the transaction.