When success breeds failure: the role of self-efficacy in escalating commitment to a losing course of action

The search for individual differences relevant to behavior in escalation situations has met with little success. Continuing the search, this study investigated self-efficacy judgments as a potentially important individual difference in escalating commitment to a losing course of action. Predictions derived from self-efficacy theory suggest that self-percepts of high efficacy would exacerbate the economically irrational escalation bias whereas self-percepts of low efficacy would diminish it. These predictions were consistently supported in this laboratory study where business students responded to decision dilemmas in which funds had been committed to a failing course of action. Theoretical and practical implications of these findings are drawn for the escalation and self-efficacy literatures. © 1997 John Wiley & Sons, Ltd.