Wednesday 15 June 2016

Opportunity cost

When people are making decisions, people do not precisely know their opportunity cost, as due to lack of information, people do not know what exactly their options are. Moreover, people do not judge their opportunity costs fairly. People often realize their "opportunity costs" after events have taken place. They see the outcomes of other options as their opportunity costs, this is not fair. Because they ignore the risks of other options as they do not necessarily have the same outcomes in all states. Therefore, I think that only the options that people recognize before taking action should be  taken into account as opportunity cost; moreover, people should consider expected outcomes rather than absolute outcomes.

No comments:

Post a Comment