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You and your friend Joe have identical tastes. At 2 p.m., you go to the local Ticketmaster outlet and buy a $30 ticket to a basketball game to be played that night in Syracuse, 50 miles north of your home in Ithaca. Joe plans to attend the same game, but because he cannot get to the Ticketmaster outlet, he plans to buy his ticket at the game. Tickets sold at the game cost only $25 because they carry no Ticketmaster surcharge. (Many people nonetheless pay the higher price at Ticketmaster, to be sure of getting good seats.) At 4 p.m., an unexpected snowstorm begins, making the prospect of the drive to Syracuse much less attractive than before (but assuring the availability of good seats). If both you and Joe are rational, is one of you more likely to attend the game than the other?
The analysis of the question takes into consideration the point of view of me and my friend Joe which is as below: For me, ticket from Ticketmaster outlet bought at $30 is sunk cost. I have already paid this price and cannot recover it. This should not be considered as a cost of not going to the game. In deciding whether to see the game, I should compare the benefit to see the game with the additional cost to attend this game. That is, the opportunity cost of my time and the cost of driving through the snowstorm. For Joe, the opportunity cost to attend the game is, the opportunity…

t of Joes time and whatever cost Joe assigns to driving through the snowstorm and the ticket price. Since, he buys the ticket at door he needs to spend $25 if he attends the game. Therefore, the cost to Joe to attend the game is $25 higher than my cost to attend the game. However, the benefit to attend the games are the same for the two.Thus, Joe is more likely not to attend the game.


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