Simon likes to watch movies and his Internet service provider offers streaming movies on a pay-per-view basis for $3 each. The provider also offers a service for unlimited streaming of movies for $15 per month. Simon predicts that he will watch three movies per month, so the value of the movies he would watch is not enough to opt for the unlimited streaming option. Therefore, Simon decides to stream movies on a pay-per-view basis.

a. At the end of six months, Simon finds that he only streamed movies an average of two times per month rather than the three times per month he predicted. He is still sure, however, that with the unlimited streaming option, he would watch 3 movies per month and insists that economic logic supports his prediction. What principle is he thinking about?

b. Simon’s brother Andrew likes to come to Simon’s apartment and watch movies on his 70-inch television, but being a broke college student, Andrew has very little extra money each month. Andrew would like to watch more than two movies per month, but all he has to offer Simon is $2 per month for the additional movies. Do you think Andrew’s offer would convince Simon to pay for additional movies? If not, suggest an alternative that would achieve Andrew’s goal.