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Provide some examples of sunk cost and escalation of commitment. We do try to justify the reason why we are making the decision but do we put too much thought into it that makes us feel trap?

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Provide some examples of sunk cost and escalation of commitment. We do try to justify the reason why we are making the decision but do we put too much thought into it that makes us feel trap?

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The escalation of commitment theory is based on the reasoning that just because we have invested money into project X, we should continue taking the following steps which invariably involve additional costs that will also be sunk costs, merely because we have already started the project. For example, a company begins a project by buying land for a new warehouse. They build the warehouse. At a certain point during the construction, they realize that errors were made and that the net present value of the project is negative, and the project should have never been started. The purchase of the land is a sunk cost. Because the project is ...

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