ECON 103 Lecture Notes - Lecture 4: Mental Accounting, Sunk Costs, Norm (Social)

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14 Sep 2018
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You have bought a nonrefundable ticket for a lacrosse game. You know that going to the lacrosse game will give you a benefit equal to . After you have bought the ticket, you hear that there will be a football game at the same time. Tickets to the football game cost , and you know that going to the football game will give you a benefit equal to . You tell your friends the following: if i had known about the football game before buying the ticket to the lacrosse game, i would have gone to the football game instead. Justify your answer by calculating the marginal benefits and marginal costs of your decision. Should go to lacrosse game because already bought ticket. Yes, going to lacrosse game is right decision. Go to lacrosse game: mb mc = - sh = . Go to football game: mb mc = - = .

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