Escalation Feels Rational at the Time

Category: Incentives, metrics, and consequences Doubling down often feels like the only logical option.

A company commits to building its own software platform rather than buying one. The first estimate is six months. At month six, it is perhaps half done, and the team explains that the remaining work is clearer now and just needs another three months. The leadership has already spent a great deal; stopping now would mean writing all of it off and admitting the original call was wrong. Three more months to finish what is half-built sounds far more sensible than throwing away six months of work. They approve it.

At month nine, the same conversation happens, with the same logic, and a slightly larger number already sunk. Each time, the decision is framed identically: we are nearly there, and walking away now wastes everything we have already put in. Each time, that framing is genuinely persuasive, because each time it is true that a lot has been spent and that finishing is the only way to get anything for it. So they continue, for the same good reason, at every stage.

Two years and several times the original budget later, they have a platform that mostly works and that they could have bought, better, on day one. Not one of the decisions to continue was irrational on its own. Every one was the sensible choice given what had already been spent. The irrationality lived only in the sum, and nobody was ever asked to approve the sum — they were only ever asked, over and over, to approve three more months.

The Principle

Continuing a failing course of action usually feels more rational than stopping, because the cost already sunk makes finishing look cheap and quitting look wasteful — so escalation is chosen, repeatedly, by reasonable people doing the maths the wrong way round.

At every decision point, the question feels like “do I waste everything spent so far, or spend a little more and salvage it?” Framed that way, continuing almost always wins. The trap is that the money and effort already gone are gone either way — they should play no part in the choice — but they feel like the most important thing in the room, and they pull every decision toward more of the same.

Why It Is Inevitable

We treat what we have already invested as something to be protected, not as a cost already paid. Walking away makes that investment a visible, total loss, which feels like an unbearable admission; continuing keeps the hope of redemption alive, however thin. Given the choice between certain loss now and possible vindication later, people reliably choose the gamble, even when the gamble is bad.

There is also the matter of who has to own the reversal. The person deciding whether to continue is often the person who launched the thing, and stopping is a public confession that they were wrong from the start — while continuing defers that reckoning and might even avoid it. The incentive to escalate is strongest exactly for the people with the authority to stop, which is why it so rarely gets stopped.

And each step is individually small and individually reasonable. Nobody is asked to commit two years and a fortune up front; they are asked to commit three more months to finish something nearly done. That is an easy yes. The full scale of the commitment only exists in the accumulation, and the accumulation is never put on the table as a single question.

How It Shows Up

• “We’ve come too far to stop now” — offered as a reason to continue, when how far you have come is irrelevant to whether continuing is wise.
• Projects, products, or hires kept alive long past the point of obvious failure, defended by the size of what is already invested.
• Each new commitment justified by the last, the deadline and the budget revised in small forgivable increments.
• The strongest defenders of continuing are the people who started it.
• A growing private sense among those involved that this is doomed, alongside a continued public commitment to seeing it through.

Why It Causes Damage

Escalation pours good resources after bad, and it does so for exactly as long as the failing thing keeps absorbing them — which is often until something external forces a stop. The total loss is therefore far larger than it needed to be, because the early, cheap moment to quit was passed over in favour of an expensive, drawn-out commitment to a lost cause.

It also consumes the things that could have gone elsewhere. Every month spent salvaging a failing project is a month of people, money, and attention not spent on something that might have worked. The visible waste is the sunk cost; the invisible and usually larger waste is everything that was starved to feed it.

How To Counter It

• Ignore what is already spent. The only honest question is: starting from today, with what we now know, would we choose to invest more in this? If the answer is no, the past spending does not change it.
• Decide the stopping conditions before you start, while you can still think clearly — then hold to them when the moment comes and the sunk-cost story is whispering at you.
• Put the total on the table, not just the next increment. “Three more months” is a different question from “two years and counting,” and only the second is the real one.
• Get the call made by someone who did not launch the thing and has no reputation tied to its survival.
• Treat a clean, early stop as a success to be praised, not a failure to be hidden. If quitting is always humiliating, escalation is the only face-saving option left.

What Good Looks Like

Organisations that can stop things — that judge each commitment on its future, not its past, and that have made walking away from a failing effort an ordinary, respectable act rather than a career-ending confession. Where the question “would we start this today?” is asked out loud and answered honestly, and where the person who calls an early halt is thanked for the resources they just saved.

They lose money on the things that do not work, like everyone, but they lose it early and cheaply, because they never let what was already spent dictate what would be spent next.

A Reflective Question

Think of something you are still committed to partly because of how much you have already put in. If you were deciding today, with none of that history on the books, would you start it — and if not, what is the sunk cost actually buying you?