When Managers Add Up All the Money Already Spent on a Project

question 98

Multiple Choice

When managers add up all the money already spent on a project and conclude it is too costly to simply abandon it, it is known as a(n) ________ bias.

• A)anchoring and adjustment
• B)confirmation
• C)availability
• D)representativeness
• E)sunk cost

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Definitions:

Right of Contribution

The legal right of a party to reclaim a portion of damages or losses from another party who is jointly liable.

Surety's Obligation

A legal responsibility assumed by a surety, guaranteeing the performance or obligations of another party.

Debt

Money owed by one party to another under the condition of repayment.

Surety

A financial guarantee by a third party (the surety) to cover a debtor's obligations in case of default.