Carl Recently Bought a Used Car-And It's a Lemon

question 94

Multiple Choice

Carl recently bought a used car-and it's a lemon.He has spent thousands of dollars on repairing the car,and this week,the mechanic told him it needs a new radiator.Carl thinks about how much money he has put into the car and thinks that,because he has invested so much money in repairs,he'd be better off just making the repair as opposed to spending money to buy a new car.Carl is a victim of

• A)overconfidence.
• B)the sunk-cost fallacy.
• C)opportunity costs.
• D)hindsight bias.

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Definitions:

Punitive Damages

Compensation awarded to a plaintiff beyond actual damages, intended to punish the defendant for egregious wrongdoing and deter similar behavior.

Compensatory Damages

Financial compensation awarded to a plaintiff to cover actual losses and harm suffered due to another party's actions or negligence.

Punitive Damages

Monetary compensation awarded in lawsuits over and above actual damages, intended to punish the defendant for particularly egregious conduct.

Policy Limits

The highest sum an insurer will disburse for a claim covered by the policy.