Richard Thaler
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Appearances Over Time
Podcast Appearances
You paid for it.
Going to the concert doesn't get that money back.
That's gone.
It's sunk.
But people have a lot of trouble with that.
So let sunk costs sink, is my advice.
The ultimatum game.
The ultimatum game was devised to try to illustrate how people feel about fairness.
And here's the way it works.
You and I get to play this game.
I get $100, and I'm told I have to share it with Lynn.
I make you an offer of some share of the $100.
Say I have $101 bills, so I can give you some number of those.
And you get to say yes or no.
And if you say yes, you get what I offered you and I get the rest.
If you say no, we both get nothing.
Now, what does economic theory say will happen?
Well, I'm an economist, so I assume that you think more money is better than less money.
One dollar is more than zero.
So if I offer Lynn a dollar, I mean, one is better than zero.