Prospect theory and sunk costs effect are two reasons why people:
A)engage in escalation of commitment.
B)define problems in terms of preferred solutions.
C)make nonprogrammed decisions rather than programmed decisions.
D)engage in satisficing.
E)encourage employee involvement.

Question

Quizplus · Accepted Answer

Prospect theory suggests that people are more likely to take risks to avoid losses than to achieve gains, and sunk costs effect refers to the tendency to stick with a decision because of already-invested resources, both of which contribute to escalation of commitment.

Prospect Theory and Sunk Costs Effect Are Two Reasons Why