|Learning Objectives: Opportunity cost reasoning|
|Lecture handout: Understanding cost*
The key aim of the session is to understand the economic concept of opportunity cost.
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.
I believe this case demonstrates our inherent reluctance to lie. However:
2 of the bestselling Holocaust memoir authors of the golden age of misery memoirs were both fakes, and they actually met each other at a conference and claimed to remember each other from the time. neither had ever been to Nazi-occupied Europe
— Ed West (@edwest) September 11, 2020
In the debrief it’s important to realise when someone is being evasive. I good example of this is in the US 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:
- Further reading: Steele, Jeffrey, “The Origins of EVA”, Chicago Booth Magazine, Summer 1998
|These resources form part of my Managerial Economics course map. You can watch the full YouTube playlist here. This page ties into Chapter 2 of ‘Economics: A Complete Guide for Business‘.|