Understanding cost

Group activity:

  • Malhotra, Deepak, 2005, “Hamilton Real Estate: BUYER”, Harvard Business School Case No. 9-905-052 (£)
  • Malhotra, Deepak, 2005, “Hamilton Real Estate: SELLER”, Harvard Business School Case No. 9-905-053 (£)
Lecture handout: Understanding cost*

The key aim of the session is to understand the economic concept of opportunity cost.

I believe that the case discussion demonstrates our inherent reluctance to lie. However:

Here is a more recent example of obtaining copyright for the use of a photograph:


In the debrief it’s important to realise when someone is being evasive. I good example of this is in the U.S. version of The Office, where Andy has to repeat the same question to Angela 3 times before he gets to the truth. (Season 5, Episode 12, from 9:22 – 10:13).

‘Better Call Saul’ has a nice example of the sunk cost fallacy:


This page ties into Chapter 2 of Economics: A Complete Guide for Business

Learning Objectives: Opportunity cost reasoning, basic principles of negotiation.

Focus on diversity: The Hamilton Real Estate case is used as the first session on the Harvard MBA course on negotiation. It was written by Deepak Malhotra who has a recent book called ‘Negotiating the Impossible‘. You can follow him on Twitter @Prof_Malhotra.

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