Ludo authorizes the expenditure of an additional $200,000 for the production of a new product despite mounting concerns from top management that it will be unprofitable. His behaviour illustrates the phenomenon of ___.
A) confirmation bias
B) represenation bias
C) anchoring bias
D) availability bias
E) escalation of commitment

Question

Quizplus · Accepted Answer

Ludo's decision to authorize additional expenditure despite mounting concerns from top management that it will be unprofitable is an example of escalation of commitment. This bias refers to the tendency to continue investing time, money, or resources into a decision even when evidence suggests it may be a mistake. Ludo is committed to the decision and is increasing investments rather than acknowledging the decision may have been a mistake.

Ludo Authorizes the Expenditure of an Additional $200,000 for the Production