Why Does Escalation of Commitment Occur

question 10

Essay

Why does escalation of commitment occur?

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Definitions:

Secured Lending

The practice of issuing loans backed by collateral, providing the lender with security in case of borrower default.

Collateral

An asset offered by a borrower to secure a loan or credit, which can be seized by the lender if the borrower fails to repay according to the terms of the loan.

Contingent Fee

A payment arrangement where a lawyer or other professional is paid a fee only if the case is won or settled favorably, typically as a percentage of the settlement or award.

Restatement (Third)

A reference to the third series of publications by the American Law Institute aiming to distill, clarify, and restate key principles of common law.