Keith just got the newest iPhone for his birthday. He quickly transfers his data to the new phone and throws his older generation iPhone in a drawer. The old iPhone sits in the drawer unused, even though Keith could have sold it to a friend for $100. Economists would say this behavior is _____ and would use the concept of _____ to explain his choice.

Question

Quizplus · Accepted Answer

Economists might consider Keith's behavior as irrational because he is not making a decision that maximizes his economic benefit. The concept of the implicit cost of ownership bias explains this choice, as Keith might irrationally overvalue his old iPhone simply because he owns it, leading him to keep it unused instead of selling it for $100.

Keith Just Got the Newest IPhone for His Birthday