THE EFFECT OF NEGATIVE FRAMING AND RISK PREFERENCE IN THE ADVERSE SELECTION CONDITION TOWARD ESCALATION OF COMMITMENT

Abstract

Abstract : The Effect of Negative Framing and Risk Preference in the Adverse Selection Condition Toward Escalation of Commitment. This study is intended to examine the influence of negative framing, risk preference and adverse selection toward finance manager’s decision for continuing a failing project (escalation of commitment). This experiment using factorial design 2x2 and 1x2 between subject with instrument like cases given for 91 respondents. Hypothesis in this study were analyzed by using two ways ANOVA. The results show that negative framing has significance influence toward finance manager’s decision for continuing a failing project. On the other hand, interactive effect between negative framing and adverse selection has no significance influence toward finance manager’s decision for continuing a failing project. This research also giving result if has no significance between risk preference to finance manager’s decision for continuing a failing project. Also with interactive effect between risk preference and adverse selection has no significance toward finance manager’s decision for continuing a failing project.

Keywords: Negative framing, risk preference, adverse selection, escalation of commitment