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Escalation bias implies that managers favor reinvestments in projects that are doing poorly over those doing well. We tested this implication in a marketing context by conducting experiments on advertising and product-design decisions. Each situation was varied to reflect either a long-term or a short-term decision. Besides these four conditions, we conducted three replications. We found little evidence of escalation bias by 365 subjects in the seven experimental comparisons.
Armstrong, J. S., Coviello, N., & Safranek, B. (1993). Escalation bias: does it extend to marketing?. Retrieved from http://repository.upenn.edu/marketing_papers/16
Date Posted: 06 July 2006