The Effect of Optimism Bias on the Decision to Terminate Failing Projects

This research presents the findings from an experiment that investigated to what extent decision makers suffer from optimism bias when escalating a commitment to failing projects; 345 individuals, involved in project decision making, participated in the experiment. A new form of optimism bias, namely post-project optimism bias, is defined. Post-project optimism bias is an overly optimistic belief that a project will deliver better business benefits than what was planned or that can be proven. It is further confirmed that both post-project and in-project optimism biases have significant effects on the escalation of commitment to failing projects.