Disentangling sunk-costs and completion proximity: The role of regulatory focus

• Escalation research has generally failed to account for motivational context.
• Regulatory focus appears to shape decision makers' motivational priorities.
• Proximity to completion moderates the effect of regulatory focus on escalation.
• Promotion focused people are likely to escalate when projects are almost complete.

Why do some people escalate commitment to a project that is unlikely to succeed? Existing research shows that people tend to escalate when prior expenditures (e.g., sunk costs) are high, whereas other research suggests that people tend to escalate when a project nears completion, regardless of prior expenditures. In this paper, we argue that decision-makers have diverse goals driven by regulatory foci that represent alternative motivations for escalation. Specifically, people who regulate their behaviour towards achieving gains (i.e., a promotion focus) are influenced more strongly by proximity to project completion than those who focus on the presence or absence of losses (i.e., a prevention focus). Across empirical studies using different operationalizations of regulatory focus, we show that increased promotion focus, but not prevention focus, exacerbates escalation behaviour as a project nears completion. Our findings highlight the importance of accounting for individual motivations when designing interventions to curb escalation behaviour.