Rick finds a great Internet deal on an all-inclusive vacation rental in the Tropics for $1200,and immediately places a $1000 nonrefundable deposit on it.He later learns that the dates he planned to go are right in the middle of hurricane season,and it is likely to be miserable and potentially dangerous weather the entire time.Rick decides he cannot waste the $1000 and takes the trip anyway.While sitting in the rain,miserable,Rick realizes he should have:

Question

Quizplus · Accepted Answer

Rick should ignore the sunk cost of $1000 and skip the trip. Sunk costs are costs that have already been incurred and cannot be recovered, so they should not be considered in making future decisions. In this case, the $1000 is a sunk cost because it is nonrefundable, and it should not affect Rick's decision on whether to go on the trip or not. Continuing with the trip despite the potential danger and misery is not a rational decision.

Rick Finds a Great Internet Deal on an All-Inclusive Vacation