The Role of Information Asymmetry in Escalation Phenomena: Empirical Evidence
Document Type
Article
Publication Date
2-2009
Abstract
Economic rationality dictates that only incremental costs and benefits should affect decisions. Observed behavior often seems to violate this principle, resulting in unwarranted commitment to past choices and their escalation. In this paper, we present experimental results that show that information asymmetry plays a key role in determining when such escalation behavior occurs. This finding opens new avenues for mitigating escalation behavior since information asymmetry is an environmental feature that can be modified by organization design and explicit economic rewards.
Recommended Citation
Berg, J., Dickhaut, J. and Kanodia, C. "The Role of Information asymmetry in Escalation Phenomena: Empirical evidence." Journal of Economic Behavior and Organization, 69 ,pp. 135-147, February, 2009.
DOI:10.1016/j.jebo.2007.07.007
Peer Reviewed
1
Copyright
Elsevier
Comments
This article was originally published in Journal of Economic Behavior & Organization, volume 69, in 2009.
The link above is to the authoritative publisher’s version, as noted by the Economic Science Institute, and may reside behind a paywall. If denied access, Chapman students, faculty, and staff should try this link.