Sunk and Hidden Cost

This week in our discussion, we considered an example where the consumers and businesses tend to commit decision fallacies such as the sunk cost fallacy and the hidden cost fallacy. This assignment consists of four parts:   1.) Identify another example where a business model depends on consumers’ tendency to commit decision fallacies or where emotion introduces undue influence on consumers’ spending patterns.   2.) Explain your example—provide supporting references to explain the connection between the example and apply these economic concepts.   3.) Describe how ethics and the legal environment affect the decision-making of the business and consumers in your example.   4.) Lastly, provide your analysis. Are there other ways for firms to profitably operate in this market, or is the scenario described in your example the only way? Explain.   Your submission should consist of 1-2 pages in APA format. What matters for grading is your analysis. Hence, tables, charts, and figures do not count against your page total or your references page. Unless vital to your story, you should relegate the supporting tables, charges, and figures to an appendix.   It is essential to cite reputable and scholarly sources. For economics, business, and statistical reasoning, you should cite the textbook or other similar sources. It is essential to avoid referring to study sites such as,,, or anything similar. Those sites are poor substitutes for the text and more scholarly sources.

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