Dear Modiji, Please consider the sunk cost of the lockdown otherwise our ship will be shrunk
The concept of the sunk cost belongs to the field of "behavioral economics". It's a very interesting and important field but largely ignored till now. But it gaining traction. In Previous year's economic survey, our Economic advisor devoted the whole chapter to behavioral economics. This field deals with the micro-level human activities that can make huge differences. Here like to give one example to understand what this field is - Richard Thaler always set paper of 137 marks for his students. The reason behind this is, in earlier days of his teaching, when he set tough paper and students get 70/100, Students don’t like that score. But once he set a paper of 137 marks and students get an average 90 marks (which are also 70%), the student feels happy! Economist make calculations and projection on the assumption the human will make a rational choice. But from the above example, it's clear that we often don’t make a rational choice. From this, it's ...