The Motley Fool Discussion Boards
Personal Finances / Credit Cards and Consumer Debt
|Subject: Re: Sunk costs||Date: 11/13/2012 3:25 PM|
|Author: Jacketfan||Number: 306419 of 308028|
If he postpones his trip the cost of his trip will change. If he ignores the cost of the ticket he purchased then when comparing the two options go now or go later, the costs of the two options will be different. As a result the cost of the plane ticket does show up in the consideration of when to go. The cost of course is only one part of the decision but for many people and in many cases it is the deciding factor.
I think the proper way to handle this from a purely financial perspective is to calculate the cost of going now, NOT including the plane ticket, and compare that to going at some point in the future including the NEW travel he would need to purchase. Of course is money is no object then the sunk cost would not have mattered in the first place.
But the only decision on the table was to go now, or not to go now. There is no requirement that he goes to London at all (though he probably will.) So I think he applied the concept of sunk cost perfectly. And more importantly, it would be a hard thing for most people (my wife especially) to do, that being ignoring the sunk cost. Me, I'm pretty good at putting decisions already made where they belong, in the past.
|Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|