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366 Decision framing and cognitive inertia
Clearly, the social processes causing escalation of commitment will tend
to magnify any inherent inertia toward a currently followed strategy.
Here are two well-known examples of non-rational escalation of
commitment:
(1) The Tennessee-Tombigbee water project. This huge construction project
involved building a set of locks designed to connect the Tennessee
and Tombigbee rivers so that the US state of Tennessee would
be opened up to the Gulf of Mexico. By 1981 the costs incurred
had already amounted to over $1 billion. However, new estimates
revealedthatthecostofcompletingtheprojectfromthatpoint
forward would be greater than the potential benefits. The US senators
involved with the project argued that ‘To terminate a project in
which $1.1 billion has been invested represents an unconscionable
mishandling of taxpayers’ dollars’ and ‘Completing [the project] is
not a waste of taxpayers’ dollars. Terminating a project at this stage
of development would, however, represent a serious waste of funds
already invested.’ The project was completed in 1985, but will never
pay back the costs incurred in its construction.
(2) Concorde. The supersonic aircraft was developed in the late 1960s
and early 1970s by France and Britain. However, before the project’s
completion it was clear that it was unlikely to be an economic success
because few orders had been placed for it and costs were escalating.
As a result the British and French governments considered abandoning
the project. One of the main arguments against abandonment was
the money that had already been spent and the project was allowed
to continue with further resources being invested in it. Although it
was a technological marvel the plane eventually cost around $1bn to
develop. Only 20 planes were built and these were virtually given
away to the two countries’ national airlines. The project has never
made a profit and the huge cost has largely been borne by French
and British taxpayers.
Overall, the results of research on escalation of commitment indicate
that once a great deal of time, effort and resources have been invested
in a selected course of action and theoutcomesarenotasgoodas
expected, then the ‘responsible’ decision maker will tend to feel that
there is ‘too much invested to quit now’. But resources already invested
are non-recoverable sunk costs and, logically, should not be considered
in the decision of whether or not to continue or discontinue commitment
to a course of action.