Suppose Dean has season tickets for the University of North Carolina men's basketball games. He paid $2,000 for the season tickets. One February afternoon, Dean is very excited about going to the UNC vs. Duke game because of the traditional rivalry between the two teams. Unfortunately, his wife invited several friends over for an evening dinner party and tells Dean he needs to stay home and help her clean the house in preparation for the guests. Dean very much wants to go to the game, but knows he will have to face the wrath of his wife if he does. In his defense, Dean states "I already paid for the game! I have to go or it will be a waste of money." Explain why Dean's reasoning is incorrect.
What will be an ideal response?
Dean has already paid for the ticket and thus the per ticket price is a sunk cost. Dean's defense suffers from the sunk-cost fallacy. The cost of the game includes the consequences of an angry wife, but not the dollar price of the ticket. If he goes to the game he pays a toll in his relationship, but if he does not go, the cost does not include the price of the ticket.
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