Sally bought stock in ABC Company in hopes of making a profit.The stock's price steadily continued to drop.Sally did not sell it.What does this illustrate?

Question

Quizplus · Accepted Answer

Sally's decision not to sell despite the stock's steady decline illustrates escalation of commitment. This refers to the tendency for people to continue investing resources (such as time, money or effort) into a failing course of action in the hope of eventually achieving success, even when the evidence suggests that it is unlikely. In this case, Sally's initial investment (buying the stock in the hopes of making a profit) has not worked out, but she persists in holding onto it rather than cutting her losses and selling.

Sally Bought Stock in ABC Company in Hopes of Making