How Does the Concept of "Escalation of Commitment" Explain Why

question 49

Essay

How does the concept of "escalation of commitment" explain why decision makers tend to stick with losing ventures?

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Definitions:

Ownership Interest

A legal or equitable claim in property, entitling the holder to a share of the asset's value, benefits, or profits.

Management Rights

The legal and practical powers that allow managers and executives to direct operations and make decisions within an organization.

Hourly Wage

Compensation paid to an employee based on the number of hours worked.

Secret Profit

Gains obtained by an individual, often an agent or fiduciary, without the knowledge or consent of the principal or beneficiary they represent.