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In this video, weamp;#39;re going to discuss the concept of sunk costs. A sunk cost is 2 things: (1) itamp;#39;s a cost that has already been incurred, and that means that youamp;#39;ve already invested the money (youamp;#39;ve already spent the money and it is gone). (2) It canamp;#39;t be changed going forward. Youamp;#39;ve invested the money. You canamp;#39;t go back. Thereamp;#39;s nothing that can be done. For these 2 reasons, a sunk cost is irrelevant to decision making. Why? The money is gone. It has already been spent. It is already incurred, and we canamp;#39;t change it. We canamp;#39;t do anything about it. So it shouldnamp;#39;t be affecting our future decisions. Let me just walk you through an example, and youamp;#39;ll see in a moment why this is the case. Letamp;#39;s say as an example, you pay $10 for a movie ticket. The movie that you wanted to see was sold out, so you pay $10 for some other movie that you really donamp;#39;t want to see as much. When yo
