Guilty on One Count: Negligence (of Opportunity Cost)
The concept of opportunity cost is not foreign to most people who have taken an introductory economics class at some point, nor is it terribly complex to grasp if you don’t have that background. Basically, it is the value attributed to the next best thing that has been foregone in favor of something else. Many economic models take this principle into account when they are interpreted to describe consumer behavior. However, when it comes to application in the real world, Frederick et al. (2009) argue that this assumption that consumers evaluate their opportunity cost at every turn does not hold Continue reading Guilty on One Count: Negligence (of Opportunity Cost)