BazermanMoore

110 Chapter 6: The Escalation of Commitment
at Barings Bank when he was assigned to manage the bank’s Singapore office. As
Leeson recounts in his 1997 book Rogue Trader, he engaged in some unlucky trades
using bank money. The risk-averse option would have been to accept his small losses at
the outset. Instead, he hid his losses and continued to gamble on risky investments with
ever-larger sums of money, always hoping to dig himself out of the hole that he had
created. From Chapter 4, we know that most of us tend to be risk seeking in the domain
of losses. Leeson’s luck did not turn. By the time his losses were discovered, they had
mounted to $1.4 billion. The result was the collapse of the venerable 233-year-old Barings
Bank. Leeson himself was caught trying to flee the country and was sent to prison.
Now reconsider how the situation might have turned out if a different manager at
Barings had been given the choice of whether to continue to pursue Leeson’s risky
investment strategies after he had lost a few million dollars. This person would have
been likely to evaluate the potential consequences from a different reference point.
Without having made the initial decision, or having attempted to hide it, this manager
would have been more likely to choose against continued risky investment.
Impression Management
Returning to the hiring decision from the beginning of this chapter, even if your perception
and judgment led you to the conclusion that the underachieving employee
should be fired, you might not choose to fire her. Why not? Firing the employee would
be tantamount to a public announcement that your earlier decision was a mistake. You
might decide to keep the employee on simply to ‘‘save face.’’ Managing the impressions
of others serves as a third reason for escalating commitment.
In addition to not wanting to admit failure, we also try to appear consistent to
others. Increasing our commitment to our previous actions is one sign of consistency.
Staw and Ross (1980) suggest that our society perceives administrators who are consistent
in their actions as better leaders than those who change their behavior or opinions.
John Kerry’s failed bid for the U.S. presidency in 2004 ran up against this perception.
Many voters expressed grave misgivings about Kerry’s ‘‘waffling’’ over the Iraq war.
Kerry had voted for a resolution in the U.S. Senate giving President Bush the authority
to go to war in Iraq, but then was heavily critical of the war in his own presidential
campaign. Kerry’s now-infamous explanation for his stance on the Iraq war—‘‘I voted
for it before I voted against it’’—was cited as evidence of his indecisiveness. News stories
with headlines such as ‘‘Kerry’s Top Ten Flip-Flops’’ became common (CBS News,
2004).
George W. Bush’s campaign skillfully used Kerry’s apparent inconsistency to imply
hypocrisy and fuel concerns that voters could not rely on him to stick to his convictions.
By contrast, Bush’s campaign ran advertisements that heralded Bush as offering
‘‘Steady leadership in times of change.’’ It seemed to matter less that George Bush’s
stance on many issues, from the Iraq war to the Patriot Act to domestic spying, was not
particularly popular with voters. Bush’s unwillingness to revise his position on key issues,
regardless of their unpopularity or their impracticality, was regarded as evidence
of strength of character and steadfast determination. ‘‘You may not always agree with
me, but you know what I stand for,’’ Bush proudly announced (Webb, 2004).