Posts Tagged economics

In one example, he suggests you are going downtown to the theatre with a $20 ticket, and a $20 bill in your wallet. When you arrive, you realize you have lost the ticket; most people will not spend the remaining $20 on another ticket. If you had gone downtown with two $20 bills however, and at the theatre realized that you had lost one of the $20’s, you would use the remaining one to purchase your ticket. In the first case, you see the ticket as now costing $40 (way too much!), but in the second case, you see the lost $20 as not being related to the cost of the ticket. In reality, both scenarios are exactly the same.

Continue reading...