Esha plans to see a movie. She has $100 cash in her wallet. A cinema ticket costs $20, and this is the highest price she is willing to pay. Compare the followingalternatescenarios.

Scenario (X): Esha plans to buy a $20 ticket when she arrives at the cinema. However, on her way to the cinema, she realises that she has lost $20 cash out of her wallet.She goes ahead and buys a ticket to see the movie.

Scenario (Y): Esha pre-purchased a $20 ticket to see a movie. As she arrives at the cinema, she realises that she has lost the pre-paid ticket and the cinema has no record of it. In this scenario, assuming Esha is a rational decision-maker (in the orthodox economic sense)

a.Esha will buy a ticket because paying more to get what one wants is better than paying the maximum but not getting what one pays for.

b.Esha will buy a ticket because, despite the loss of the pre-paid ticket, she has already devoted her time and effort to get to the cinema and doesn't want that time and effort to go to waste.

c.Esha will not buy a ticket because scenarios (X) and (Y) are fundamentally different. In (X), the $20 lost was simply part of Esha's $100 'spending money' - not necessarily intended for a movie. But in (Y), the $20 had been specifically 'invested' in seeing a movie - in this case, she hasn't just lost money, she has lost a movie ticket.

d.Esha will not buy a ticket because, although the cost of going to the cinema would be only $20 in scenario (X), it would be $40 in scenario (Y). In (X) she pays for the movie once, but in (Y) she pays twice.

e.Esha will buy a ticket and see the movie because (X) and (Y) are identical scenarios in terms of the amount of money lost. Since in (X) she was willing to pay for a ticket after losing $20, it stands to reason that in (Y) she would be willing to pay for a ticket after losing a pre-paid ticket worth $20.

f.Esha will now be indifferent as to whether she sees a movie or not: her desire to see the movie (valued at $20) is precisely equal to the price of the pre-paid ticket she lost.