Asked by Joseph Stewart on Jun 26, 2024
Verified
Which of the following is probably an example of the irrational treatment of sunk costs?
A) Jim studied the computer output for two hours before the big meeting, but he couldn't use the information.Before the next meeting he studied the output for four hours.
B) Mary obtained much more information than she needed in order to make a decision on the leasing arrangement.
C) Janine had her travel agent book two flights for her to New York so that she was certain not to miss the big meeting.
D) The pilot feared landing on the remote airstrip because there had been an accident there the day before.
E) The company president decided to cancel the expansion project even though construction work had already begun.
Irrational Treatment
Behavior or actions that lack reason or logical thought, often leading to unfair treatment.
Sunk Costs
Expenses that have already been incurred and cannot be recovered, which should not affect future decision-making but often do.
- Discern the implications and approach towards sunk costs in the context of decision formation.
Verified Answer
SD
Simon DabadieJul 02, 2024
Final Answer :
A
Explanation :
A) reflects the irrational treatment of sunk costs because Jim continues to invest time (a sunk cost) into studying computer output that was previously unhelpful, hoping for a different outcome without rational basis.
Learning Objectives
- Discern the implications and approach towards sunk costs in the context of decision formation.