Framing involves making decisions according to the way a problem is presented. A situation may be presented negatively or positively depending on the problem’s information.
The description of a problem plays a significant role in determining the choices made to address that problem. People may portray risk-seeking behavior when the problem is framed negatively, or they may portray risk-averse behavior when the problem is presented positively.
Escalation of commitment involves making decisions based on past information, even if the information is misleading. For instance, managers may overcommit resources to a particular project even if the project has a record of performing poorly.
Managers tend to stick to investment plans based on how the financial information about the project was presented to them. If the prior research on the investment was framed negatively, the manager is likely to make escalator decisions.
On the contrary, if the prior research is framed in positive information, the manager is likely to deescalate commitment and think of alternative decisions that may lead to the success of the investment.
For instance, a positively framed project will allow the manager to easily notice the losses likely to be incurred by investing heavily in the project. They can then make deescalating decisions by seeking profitable alternative investments.
However, when an investment project is presented with negatively framed information, the manager is likely to make escalating decisions. They will become overcommitted to the project by investing heavily in it even if the risks for a loss are high.