extensive research led by Staw shows that once people make an initial investment of time, energy, or resources, when it goes sour, they’re at risk for increasing their investment. Gamblers in the hole believe that if they just play one more hand of poker, they’ll be able to recover their losses or even win big. Struggling entrepreneurs think that if they just give their start-ups a little more sweat, they can turn it around. When an investment doesn’t pay off, even if the expected value is negative, we invest more.
