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Attribution Bias and Overconfidence in Escalation of Commitment: the Role of Desire to Rectify Past Outcomes

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Attribution Bias and Overconfidence in Escalation of Commitment: the Role of Desire to Rectify Past Outcomes Georgia State University ScholarWorks @ Georgia State University Business Administration Dissertations Programs in Business Administration Spring 5-11-2013 Attribution Bias and Overconfidence in Escalation of Commitment: The Role of Desire to Rectify Past Outcomes Delilah Castillo Tine Georgia State University Follow this and additional works at: https://scholarworks.gsu.edu/bus_admin_diss Recommended Citation Tine, Delilah Castillo, "Attribution Bias and Overconfidence in Escalation of Commitment: The Role of Desire to Rectify Past Outcomes." Dissertation, Georgia State University, 2013. https://scholarworks.gsu.edu/bus_admin_diss/23 This Dissertation is brought to you for free and open access by the Programs in Business Administration at ScholarWorks @ Georgia State University. It has been accepted for inclusion in Business Administration Dissertations by an authorized administrator of ScholarWorks @ Georgia State University. For more information, please contact [email protected]. PERMISSION TO BORROW In presenting this dissertation as a partial fulfillment of the requirements for an advanced degree from Georgia State University, I agree that the Library of the University shall make it available for inspection and circulation in accordance with its regulations governing materials of this type. I agree that permission to quote from, to copy from, or publish this dissertation may be granted by the author or, in his/her absence, the professor under whose direction it was written or, in his absence, by the Dean of the Robinson College of Business. Such quoting, copying, or publishing must be solely for the scholarly purposes and does not involve potential financial gain. It is understood that any copying from or publication of this dissertation which involves potential gain will not be allowed without written permission of the author. Delilah Castillo Tine NOTICE TO BORROWERS All dissertations deposited in the Georgia State University Library must be used only in accordance with the stipulations prescribed by the author in the preceding statement. The author of this dissertation is: Delilah Castillo Tine 2987 Silvermere Lane Duluth, GA 30097 The director of this dissertation is: Mark Keil Department of Computer Information Systems Robinson College of Business Georgia State University P.O. Box 4015 Atlanta, GA 30302-4015 Attribution Bias and Overconfidence in Escalation of Commitment: The Role of Desire to Rectify Past Outcomes BY Delilah Castillo Tine A Dissertation Submitted in Partial Fulfillment of the Requirements for the Degree Of Executive Doctorate in Business In the Robinson College of Business Of Georgia State University GEORGIA STATE UNIVERSITY ROBINSON COLLEGE OF BUSINESS 2013 Copyright by Delilah Castillo Tine 2013 ACCEPTANCE This dissertation was prepared under the direction of the Delilah Castillo Tine Dissertation Committee. It has been approved and accepted by all members of that committee, and it has been accepted in partial fulfillment of the requirements for the degree of Executive Doctorate in Business in the J. Mack Robinson College of Business of Georgia State University. H. Fenwick Huss, Dean DISSERTATION COMMITTEE Mark Keil (Chair) Lars Mathiassen Steve Olson ABSTRACT Attribution Bias and Overconfidence in Escalation of Commitment: The Role of Desire to Rectify Past Outcomes BY Delilah Castillo Tine May 11, 2013 Committee Chair: Mark Keil Major Academic Unit: Robinson College of Business Escalation of commitment is the voluntary continuation of investing resources into what appears to be a failing course of action whose outcome is uncertain. Investigation into the escalation of commitment phenomenon is important to organizations because such behavior could result in grave economic loss. This research investigates two cognitive biases that we posit lead to IT escalation of commitment, namely, attribution bias and overconfidence in an escalation decision, as well as desire to rectify past outcomes (DRPO) for its potential role as a mediator. To test our research model, 160 IT managers participated in a web-based role-playing experiment. Attribution was manipulated at two levels (internal and external), creating two treatment conditions. We posited that the participants assigned to the internal attribution condition would escalate their commitment to the failing IT project to a greater extent than participants assigned to the external attribution condition; that individuals that have a high, versus low, level of overconfidence would have a greater tendency to escalate; and that DRPO would mediate the effects of attribution and overconfidence on escalation of commitment. Attribution bias was significant at the .1 level, but in the opposite direction of what was hypothesized; overconfidence showed a significant main effect on escalation. The effect of attribution bias on escalation was significantly mediated by DRPO, but the effect of overconfidence on escalation was not mediated by DRPO. Implications of these findings for both research and practice are discussed. Table of Contents LIST OF FIGURES AND TABLES ............................................................................................. 4 CHAPTER 1: INTRODUCTION ................................................................................................. 5 1.1 RESEARCH BACKGROUND ........................................................................................... 5 1.2 PROBLEM STATEMENT AND MOTIVATION FOR STUDY ................................... 6 1.3 RESEARCH PERSPECTIVE AND FOCUS .................................................................... 8 1.4 RESEARCH QUESTIONS ............................................................................................... 12 1.5 RESEARCH APPROACH ................................................................................................ 14 CHAPTER 2: LITERATURE REVIEW ................................................................................... 16 2.1 ESCALATION OF COMMITMENT TO A FAILING COURSE OF ACTION ........ 16 2.2 ATTRIBUTION BIAS ....................................................................................................... 22 2.3 OVERCONFIDENCE ....................................................................................................... 28 2.4 DESIRE TO RECTIFY PAST OUTCOMES (DRPO) .................................................. 33 CHAPTER 3: RESEARCH MODEL AND HYPOTHESES DEVELOPMENT .................. 35 3.1 ATTRIBUTION BIAS AND ESCALATION OF COMMITMENT ........................... 37 3.2 OVERCONFIDENCE AND ESCALATION OF COMMITMENT ............................. 38 3.3 THE MEDIATING ROLE OF DESIRE TO RECTIFY PAST OUTCOMES ............ 40 CHAPTER 4: METHODOLOGY AND RESULTS ................................................................. 43 4.1 RESEARCH APPROACH: SETTING AND PARTICIPANTS ................................... 43 4.2 EXPERIMENTAL DESIGN AND PROCEDURE ........................................................ 44 2 4.3 MEASURES ....................................................................................................................... 45 4.4 DATA ANALYSIS ............................................................................................................. 50 4.5 EVALUATION OF THE CONSTRUCTS ...................................................................... 53 4.6 EVALUATION OF THE MODEL .................................................................................. 55 4.7 EVALUATION OF THE HYPOTHESES ...................................................................... 59 CHAPTER 5: DISCUSSION, CONCLUSIONS, STUDY LIMITATIONS/DIRECCTION FOR FUTURE RESEARCH, AND CONTRIBUTIONS ............................................. 62 5.1 DISCUSSION AND CONCLUSIONS ............................................................................. 62 5.2 LIMITATIONS AND FUTURE RESEARCH ................................................................ 65 5.3 CONTRIBUTIONS ........................................................................................................... 68 REFERENCES ............................................................................................................................. 71 APPENDIX A: INTERNAL ATTRIBUTION AND EXTERNAL ATTRIBUTION SCENARIOS ..................................................................................................................... 85 APPENDIX B: QUESTIONNAIRE ........................................................................................... 87 APPENDIX C: EVALUATION OF CONSTRUCTS ............................................................... 91 3 LIST OF FIGURES AND TABLES Figure 1: The Research Model .................................................................................................................... 36 Figure 2: Total Correct Boxplot Showing Extreme Cases .......................................................................... 52 Figure 3: ANCOVA Results ....................................................................................................................... 57 Figure 4: Mediation Model ......................................................................................................................... 59 Figure 5: Modified Research Model ........................................................................................................... 61 Table 1: Summary of Hypotheses ............................................................................................................... 42 Table 2: Summary
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