Escalation in Information Technology Projects: A Discounting Theory Perspective

According to the information systems literature, many information technology IT projects go wildly over budget, drag on long past their originally scheduled completion date, and do not deliver according to initial specification. Theories that have been used to understand the escalation phenomenon in general are the self-justification theory, the prospect theory, the agency theory, and the approach avoidance theory. These theories have contributed to a considerable insight in the phenomenon of escalation, but divergence among them indicates that there are still some unanswered questions. Discounting describes how the subjective value of an outcome is altered because its outcome is either uncertain and/or delayed. Since a key factor in IT project is the uncertainty and/or delay associated with cost, schedules and functionality of the IT solutions that are made, the authors decided to introduce the concept of discounting to expand understanding of escalation behavior in IT projects.