escalation_of_commitment_measures

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escalation_of_commitment_measures [2016/01/21 17:00]
filination created
escalation_of_commitment_measures [2016/03/28 21:28]
filination
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 ====== Escalation of commitment outcomes measures ====== ====== Escalation of commitment outcomes measures ======
  
 +Other tasks: 
 +  * Anagram solving - [[https://​msbfile03.usc.edu/​digitalmeasures/​wiltermu/​intellcont/​esc%20of%20commit%20to%20prosocial%20initiatives-1.pdf|Desire for a positive moral self-regard exacerbates escalationof commitment to initiatives with prosocial aims]] (OBHDP, 2014) 
 +  * Game - [[http://​psp.sagepub.com/​content/​32/​7/​881.full.pdf|Your Money or Your Self-Esteem:​ Threatened Egotism Promotes Costly Entrapment in Losing Endeavors]] (PSPB, 2006)
  
 ===== Ski ===== ===== Ski =====
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 </​blockquote>​ </​blockquote>​
 +
 +===== Dry well =====
 +
 +
 +from [[https://​www.gwern.net/​docs/​sunkcosts/​1990-garland.pdf|De-Escalation of Commitment in Oil Exploration:​When Sunk Costs and Negative Feedback Coincide]] (Garland, Sandefur, & Rogers, 1990, JAP): 
 +<​blockquote>​
 +
 +The decision scenario was designed to portray, albeit in simplifiedform,​ a realistic petroleum drilling situation. All information pre-sented was easily understandable to petroleum geologists. To examinethe impact of dry wells on the decision to drill additional wells, allother things being equal, we deliberately excluded from our scenariosthe typically rich geological and geophysical data that geologists re-ceive when they drill a dry well. The actual scenario used in the one-dry-well condition was as follows:
 +
 +//Your company has acquired a good sized lease position within awell known North American basin, the position was acquired at acost of $135,​000.The company has recently drilled a 50 bopd [barrels of oil perday] discovery well on the lease. The acreage position is such thata minimum of five more wells can be drilled. The drilling part-nership provides a 1 million dollar budget for the five subsequentwells. The budgeted cost per well is $200,000 ($100,000 drillingcost;​ $100,000 completion cost). You have been given the finalauthority to authorize all expenditures on this project. The discov-ery well has proven out both your original exploration approachand associated geophysical data. However, the confirmation wellwas a $100,000 dry hole. Your total cost for this nonproducing wellis, thus, $100,000//
 +
 +Subjects in the two-, three- and four-dry-well conditions read thesame scenario, except that it was specified that the confirmation welland the next one, two, or three wells had all been dry holes. In additionit was specified that the total cost for these two, three, or four dry holeswas $200,000, $300,000, or $400,000. By emphasizing the total cost ofdry wells in each condition, we hoped to make sunk costs salient to allsubjects.A number of points should be made about how practicing petroleumgeologists would interpret the facts presented to them in these sce-narios. First, the positive information provided about the discoverywell clearly implies that there is oil on the land. Second, it would beassumed that the geologist had made the specific choice as to the bestlocation to drill all wells on the land. Third, the relatively low cost ofthe land, compared with the cost of drilling, is typical in the industry.Finally,​ it is typical to authorize both the cost of drilling and comple-tion (i.e., actually extracting the oil should viable commercial quanti-ties be found) for each well, even though the actual risk involved is onlythe dry-well cost, which in the present case is $100,000.
 +
 +Immediately following the scenario were two questions. ​
 +  - The firstquestion asked subjects to indicate "on a scale from 0-100 how Iikely itis that if faced with this situation, you would authorize another$200,​000 to drill the next [or third, fourth, last, depending on thesubject'​s condition] well in the program?"​ Subjects responded by cir-cling a point along a 100-point scale marked definitely would not autho-rize (1) and definitely would authorize (100) at the endpoints. The mid-point of the scale was marked even chance.
 +  - The second question asked, "​Regardless of how you answered theprevious question, what is your perception of the likelihood that thenext well to be drilled on this prospect would produce 50 or morebopd?"​ The choice of 50 bopd was based on an expert judgment that,given the budget for this project and the price per barrel for oil at thetime this research was conducted, this was about the smallest yieldthat would produce a reasonable return on investment. Subjects againresponded along a 100-point scale marked definitely would not produce50 or more bopd (1) and definitely would produce 50 or more bopd (100)at the endpoints and even chance at the midpoint
 +</​blockquote>​
 +
 +===== Commercial real estate =====
 +
 +
 +[[http://​faculty-gsb.stanford.edu/​heath/​documents/​escalationanddeescalation.pdf|Heath,​ 1995, OBHDP]]: it's complicated to copy, download and read.
  
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