Accession Number : ADA258284


Title :   Information and Incentive Mechanisms for Aligning Principal and Agent Interests in Escalation Situations


Descriptive Note : Doctoral thesis


Corporate Author : AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH


Personal Author(s) : Decker, LaRita M


Full Text : https://apps.dtic.mil/dtic/tr/fulltext/u2/a258284.pdf


Report Date : Aug 1992


Pagination or Media Count : 117


Abstract : The selection and management of new products are important issues due to the large capital investments required to bring a new product on-line. A major problem is a tendency for managers to become overly committed to a new product even when costs have been suffered which indicate the product is not economical for the firm. In recent literature, this problem has been called 'escalation to commitment to a failing course of action' or simply 'escalation'. Escalation appears to be a common problem in several types of investment decisions. When producing new products, for example, a series of investments over several years is often required during which time production levels are increased incrementally towards full production. Managers may decide at several decision points to continue with an uneconomical product rather than terminate production.


Descriptors :   *INVESTMENTS , DECISION MAKING , MANAGEMENT , PRODUCTION , TIME , COSTS , SELECTION , MONEY


Subject Categories : Economics and Cost Analysis


Distribution Statement : APPROVED FOR PUBLIC RELEASE