Chapter 4 Econ Beha

is the cost you must pay out-of-pocket to purchase something

is the value of what you forgo by incurring the explicit cost

Revenue –explicit cost –implicit cost

the idea of a separate account for windfalls, or unexpected large gains.

costs that have already been incurred and
cannot be recovered.

is met if adding (or subtracting) irrelevant options does not change an existing preference ordering

not cause Y >X.

references change as the menu changes
-exists whenever the IIA property is violated

may change the buyer’s
preferences if they exhibit menu dependence when presented with a third option, that is asymmetrically dominated
Ex: Must be worse than the dominant option in everyway, but better than the other option in one way

medium popcorn "this is the decoy"