A real estate developer in the New Jersey area purchases a large tract of land and plans to build an apartment complex equipped with a golf course and other amenities. The developer is targeting the affluent software engineers from Manhattan who are looking for second homes. Halfway through the process of construction, recession hits the nation and many people lose their jobs. There are no takers for the apartments the developer is building, as homebuyers look for less expensive options. The developer, dismayed at the huge investment he has already made in the project, decides that it would be unwise to stop the project and plans to go ahead with it. The developer's reasoning is consistent with the idea of ________.

Question

Quizplus · Accepted Answer

The developer's decision to continue with the project despite facing a setback and incurring significant financial losses is an example of escalation of commitment. This refers to the tendency of individuals to persist with a failing course of action, often due to the fear of admitting failure or losing face. The developer may be hoping that the market will turn around and that the apartment complex will eventually attract the target audience, but this is a risky strategy and may result in further losses.

A Real Estate Developer in the New Jersey Area Purchases