Escalation Of Commitment And Sunk Costs

Escalation Of Commitment And Sunk Costs

By

Leonard Zwelling

https://www.nytimes.com/2024/07/03/opinion/joe-biden-president-election.html

Here’s how Dr. Adam Grant, an organizational psychologist at the Wharton School at the University of Pennsylvania, defines escalation of commitment in an opinion piece in The New York Times on July 3:

“escalation of commitment to a losing course of action. In the face of impending failure, extensive evidence shows that instead of rethinking our plans, we often double down on our decisions. It feels better to be a fighter than a quitter.”

This is a common phenomenon in politics and business where leaders are taking a wrong course of action in which they have invested their reputations. The course of action is clearly wrong (think Vietnam). The leader, whether LBJ or Nixon, simply cannot change course and appear to have quit. Instead, he makes everything worse. This was clearly the case with Mr. Nixon and Watergate.

Sometimes these awful decisions are justified by those making them by noting how much effort and resources have already been put into the project. Those are what are known as sunk costs. They have no value in computing a future course of action. This is Finance 101.

I believe a great deal of the longevity of Dr. DePinho’s presidency of MD Anderson can be explained by an escalation of commitment on his part and an over valuing of sunk costs on the part of the Chancellor and Board of Regents of the UT System. It was obvious to most people at Anderson that choosing DePinho was a grave error. It is likely that this bitter taste in the mouths of the Regents caused them to choose Dr. Pisters next as he appeared to be the anti-DePinho.

Is history repeating itself with the current leadership of MD Anderson? I think so.

I say this with compassion, however, as I once was ruled by such emotions when I was no longer as effective as I had been as a leader when I was a vice president. Fortunately, I figured this out and had a great deal of compassion from my boss Margaret Kripke who gave me an honorable exit door with a new set of responsibilities.

Sometimes, what you did in the past is just that—what you did in the past. Something new is needed going forward or you are no longer up to the job.

This is the current case with the President of the United States. He is choosing to escalate his commitment by running again, but is doing so on sunk costs, that which he did in the past. While previous performance can be a predictor of future accomplishments, it can also be a sunk cost when you are no longer the right person for the job.

Someone in the Democratic Party has to explain this to Mr. Biden, and clearly to his wife as well.

He has had several accomplishments as President. History will treat him favorably if he leaves now for he is the one who saved us from more Trump. If he is the one who gives us Trump again, as he appears to be doing, he will suffer in the history books of tomorrow as well as for the rest of his days.

Jill, he deserves better than that.