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Escalation bias: Does it extend to marketing?

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Abstract

Escalation bias implies that managers favor reinvestments in projects that are doing poorly over those doing well. We tested this implication in a marketing context by conducting experiments on advertising and product-design decisions. Each situation was varied to reflect either a long-term or a short-term decision. Besides these four conditions, we conducted three replications. We found little evidence of escalation bias by 365 subjects in the seven experimental comparisons.

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Author information

Authors and Affiliations

  1. University of Pennsylvania, USA

    J. Scott Armstrong Ph.D., M.I.T. (professor)

  2. the University of Auckland, New Zealand

    Nicole Coviello (doctoral candidate)

  3. S.G. Warburg and Co., USA

    Barbara Safranek M.B.A.

Authors
  1. J. Scott Armstrong Ph.D., M.I.T.
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  2. Nicole Coviello
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  3. Barbara Safranek M.B.A.
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Additional information

J. Scott Armstrong has been a professor at The Wharton School since 1968. During this time he has also been a visiting professor in Sweden, Switzerland, Thailand, Australia, New Zealand, and Argentina. He is a founder and past editor of the Journal of Forecasting and the International Journal of Forecasting. In addition to forecasting, he has published research on strategic planning, the scientific method, social responsibility, and survey research methods.

holds an M.Sc. (Technology Management) and B.Comm. (Marketing) from the University of Saskatchewan, Canada. Nicole’s dissertation research focuses on the internationalization process of software developers. In particular, she examines “deviations” in international linkage development by small firms, with a focus on marketing management issues. Her other research interests relate to entrepreneurial growth, the marketing/manufacturing interface, and strategic planning processes.

Barbara Safranek worked as a marketing consultant in Japan and was then co-president of the Friends of Japan (Tokyo, Japan) for three years. Currently she is vice-president of Japanese Equities-Sales at S.G. Warburg & Co.

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Armstrong, J.S., Coviello, N. & Safranek, B. Escalation bias: Does it extend to marketing?. JAMS 21, 247–253 (1993). https://doi.org/10.1177/0092070393213008

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