Robinson pays $100 for tickets to see his favorite sports team play. With 10 minutes left in the game, his team is losing heavily and has no chance of winning the game. Robinson chooses to stay until the end of game because he wants to get the full value for his admission price. As an economist, you should advise Robinson to:

Question

Quizplus · Accepted Answer

The admission price of $100 is a sunk cost, which means the money Robinson spent is gone and cannot be recovered. Therefore, his decision of staying until the end should not be based on the value of the admission price. Instead, he should consider whether the marginal benefit of staying until the end is greater than the marginal cost. Since his team has no chance of winning, it is likely that the marginal benefit of staying until the end is low. On the other hand, the marginal cost of staying until the end may include frustration, boredom, and regretting the wasted time. If the marginal benefit of leaving now is greater than the marginal cost, Robinson should leave the game now.

Robinson Pays $100 for Tickets to See His Favorite Sports