Sam sees a brand new car that he would love to buy, but then he starts thinking about how much money he has already put into the car he currently owns. He just paid $700 to have the radiator in his car fixed. Ultimately, he decides to not buy the new car. What principle best explains Sam’s decision?
a. mental accounting
b. the sunk cost fallacy
c. the endowment effect
d. framing effects
b. the sunk cost fallacy
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