Thayer and his friend, back in his Rochester days, were given two tickets to a basketball game in Buffalo. But there was a big snowstorm. His friend said to him there’s no way we’re going to that game in this snowstorm, but if we’d paid for those tickets ourselves, we’d be going. Explain the sunk cost fallacy, how this type of behavior goes against standard economic models, and why this feature of human behavior is important to understand.
Sample Solution