Progress framing and sunk costs: How managers' statements about project progress reveal their investment intentions
This study explores how managers' framing of project progress can reveal investment intentions. In three experiments managers were asked to evaluate hypothetical progress statements related to a failing project. Experiment 1 showed that past-oriented statements, describing the amount of work done and amount of budget and time spent (75%), were perceived as revealing a preference for the sunk costs option to a larger extent than future-oriented statements describing the magnitude of work, budget and time remaining (25%). In the next two experiments, progress was described relative to explicit reference points: in Experiment 2 more than 70%, or less than 80% was done/spent, while more than 20%, or less than 30% was remaining; in Experiment 3 almost half was done/spent, or almost half remaining. These different ways of framing progress in terms of work, money, and time were readily interpreted either as arguments in support of continued investments, or as arguments for switching to a novel project, dependent upon the perceived (rather than the numerical) magnitudes of achievements, investments, and remaining resources. The studies contribute to a communicative view of framing, and give an indication of managers' implicit theories of the psychology of sunk costs.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Garland, Howard & Newport, Stephanie, 1991. "Effects of absolute and relative sunk costs on the decision to persist with a course of action," Organizational Behavior and Human Decision Processes, Elsevier, vol. 48(1), pages 55-69, February.
- Heath, Chip, 1995. "Escalation and De-escalation of Commitment in Response to Sunk Costs: The Role of Budgeting in Mental Accounting," Organizational Behavior and Human Decision Processes, Elsevier, vol. 62(1), pages 38-54, April.
- Davis, Mark A. & Bobko, Philip, 1986. "Contextual effects on escalation processes in public sector decision making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 37(1), pages 121-138, February.
- Arkes, Hal R. & Blumer, Catherine, 1985. "The psychology of sunk cost," Organizational Behavior and Human Decision Processes, Elsevier, vol. 35(1), pages 124-140, February.
- Levin, Irwin P. & Schneider, Sandra L. & Gaeth, Gary J., 1998. "All Frames Are Not Created Equal: A Typology and Critical Analysis of Framing Effects," Organizational Behavior and Human Decision Processes, Elsevier, vol. 76(2), pages 149-188, November.
When requesting a correction, please mention this item's handle: RePEc:eee:joepsy:v:31:y:2010:i:4:p:719-731. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.