Irrational escalation
Another name for Escalation of commitment
The tendency to keep raising our investment in a losing decision to justify what we've already put in, often in a competitive setting. It is another name for escalation of commitment, and closely related to the sunk cost fallacy.
In everyday life
In a bidding war, two buyers push the price of a house far above what either planned to pay, because neither wants their earlier bids to have been for nothing.
In an online auction for a vintage guitar, you keep topping the other bidder long past your limit, because backing out now would mean all your earlier bids were wasted.
Why your mind does this
Finishing what we start is usually a good strategy, since a brain that quit at every bump would never complete anything. Valuing what we already have, what we built and what we worked for keeps us committed and protects our resources. Losing what we have can hurt more than an equal gain helps, so caution around losses often makes sense.
Its family, in 30 seconds: Finishing what we started
How to spot it
Notice when beating the other side has become the goal, more than the prize itself.
How to counter it
Write down your walk-away number before any bidding or negotiation starts, and give it to someone who will hold you to it.
Same family: Finishing what we started
SourcesShubik (1971)·Wikipedia