belief updating and is not the result of some blind pursuit of a failing course of
action that occurs in spite of problem recognition. Indeed, this study demonstrates
quite clearly that escalation behavior occurs in part because negative feedback is
not perceived to be sufficiently indicative of a problem that would merit moving
away from the previously chosen course of action. The primary contribution of
this study is the introduction and testing of a theoretical model that sheds light
on why decision makers may fail to recognize problems and how this can lead to
escalation. [Received: March 2006. Accepted: June 2007