SCENARIO 12-1 You are making a decision whether to discontinue research on a new drug.This new drug would save lives,but it is uncertain whether it can be developed within a reasonable time frame and at a reasonable cost.Your firm has already spent a small fortune on this drug.You have gathered so much information in preparation for making the decision that you are unable to sort the good information from the superfluous.
-Refer to Scenario 12-1.You decide to spend more money on the project,even though you believe it to be improbable that you will succeed.You are guilty of
A)availability heuristic.
B)representative heuristic.
C)escalation of commitment.
D)satisficing.
E)ignoring the base rate.

Question

Quizplus · Accepted Answer

The decision to spend more money on the project even though it is improbable that it will succeed is an example of escalation of commitment. This occurs when individuals continue to invest time, money, or resources into something even when they know it is unlikely to be successful, often due to a desire to avoid admitting failure or to justify previous investments.

SCENARIO 12-1 You Are Making a Decision Whether to Discontinue