THE INFLUENCE OF COMPENSATION METHOD AND DISCLOSURE LEVEL ON INFORMATION SEARCH STRATEGY AND ESCALATION OF COMMITMENT

In this study we examined the extent to which compensation method and public disclosure influenced information search strategy and escalatio n of commitment. A laboratory experiment involving 182 student subject s employed a 3 (compensation: no-pay, salary, and contingent) by 2 (di sclosure level: public and private) fully randomized, crossed design. Results show that in light of negative feedback concerning performance results of an investment portfolio, subjects whose initial allocation decisions were announced publicly reduced their search for prospectiv e information, increased the search for retrospective information, and exhibited greater escalation of commitment than subjects who did not announce their initial investment strategy. The search for retrospecti ve information and escalation of commitment was monotonically higher a cross the no-pay, salary, and contingent pay conditions respectively, while the search for prospective information decreased correspondingly . This study provides evidence that escalation of commitment is positi vely related to the search for retrospective information and negativel y related to the search for prospective information. The results obtai ned from this experiment complement and extend prior work in the areas of accountability, cognitive dissonance and escalation of commitment. (C) 1997 by John Wiley & Sons, Ltd.