When Thinking Rationally Increases Biases: The Role of Rational Thinking Style in Escalation of Commitment

Abstract

This paper reports three studies examining the relationship between the rational thinking style (RTS, i.e. individual differences in relying on a conscious, analytical, and relatively affect-free information processing system) and decision quality in an escalation situation. In contrast to conventional wisdom that rational thinking increases decision quality, but consistent with the predictions derived from the cognitive dissonance theory, results of Studies 1 and 2 revealed that high scorers in Pacini and Epstein's (1999) rationality inventory were more likely to have escalation bias than were low scorers. The results further showed that only the ability component of rationality, not the engagement component, was positively correlated with escalating commitment. Similar patterns of results were obtained for situations when participants were personally responsible for prior decisions (Study 1) and when they were not (Study 2). Results of Study 3 showed that the underlying process responsible for the effect of RTS on the escalating tendency is that RTS increases beliefs in prior decisions, which in turn increases escalation. Implications for our understanding of escalation of commitment, rationality theory, and managerial practices are discussed.Cet article rend compte de 3 études examinant la relation entre le style de pensée rationnelle (RTS i.e. les différences individuelles reposent sur un système de traitement de l'information consciente, analytique et relativement

Rational Versus Intuitive Gatekeeping: Escalation of Commitment in the Front End of NPD

“…Although our study unambiguously provides evidence that rationality significantly outperforms intuition in preventing escalation of commitment, the experimental results show that even rational gatekeepers display escalation of commitment. This is in line with earlier research that found dispositional rationality to be related to escalation of commitment, without contrasting rationality with intuition though (Wong et al, ). Although the high percentage of rational gatekeepers also escalating their commitment is related to our experimental setup, which had the clear goal to induce escalation of commitment, there also might be an additional explanation for this finding.…”

“…Findings from NPD and other research domains suggest that the thinking style of a gatekeeper, i.e., the way the information about an NPD project is processed, can affect the occurrence of escalation of commitment in the front end of NPD (Dijksterhuis and Nordgren, ; Eling, Langerak, and Griffin, ; Wong, Kwong, and Ng, ). No research to date has contrasted the usefulness of different thinking styles in preventing escalation of commitment.…”

“…Rationality is likely to prevent erroneous decision making because it is not that easily influenced by emotions and can follow strict decision rules that relate to NPD performance indicators and objectives (Dane and Pratt, ; Evans, ). On the other hand, findings from the psychology literature suggest that even when applying formal gate‐decision rules and urging the gatekeeper to think rationally, rationality can still lead to incorrect decision making (Wong et al, ). The reason is that rationality may be incapable of dealing with decision problems that are as complex and uncertain as front end gate decisions (Dijksterhuis and Nordgren, ; Kahneman and Klein, ).…”

“…Our study contributes in a number of ways to the existing research streams on escalation of commitment, thinking styles, and the front end of NPD. Most importantly, prior research that looked at the impact of thinking styles on escalation of commitment has only focused on dispositional rationality and failed to take intuition into account (Aloysius, ; Wong et al, ). Our research is the first to contrast dispositional and manipulated rationality with dispositional and manipulated intuition in studying the prevention of escalation of commitment.…”

Which Cognitive Biases can Exacerbate our Workload?

“…Optimism bias • The risk is especially common, uncontrollable, and consequential (Harris et al, 2008) • Individuals are granted opportunities to affirm their strengths, values, and integrity (Sherman et al, 2009) Illusion of control • Individuals are motivated to diminish or prevent shortfalls rather than pursue achievements or progress (Langens, 2007) • Individuals are encouraged to reflect upon alternative causes of outcomes, but only if these outcomes are desirable rather than undesirable (Matute & Blanco, 2014) Self-protective similarity bias • The other person is different in gender (Gump & Kulik, 1995) The sunk cost fallacy • Individuals are granted opportunities to affirm their strengths, values, and integrity (Sivanathan et al, 2008) • Individuals feel content rather than anxious (Moon et al, 2003) • Individuals trust their intuition rather than depend unduly on logic and deliberation (Wong et al, 2008) • The alternative to their existing behavior is defined clearly and vividly (e.g., Northcraft & Neal, 1986) Status quo bias • Individuals experience negative emotions, especially feelings of uncertainty (Yen & Chuang, 2008).…”