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Say you rob a bank for 1 million. The federal government offers you a deal that if you pay 100k you will be free and clear of all charges. You don't take that d

Say you rob a bank for 1 million. The federal government offers you a deal that if you pay 100k you will be free and clear of all charges. You don't take that deal? You'd prefer to risk a decade in prison (at 10k a year)?

cm2187 10y ago
That decision should be independent on whether there was 1 million or 10k in the bank when you robbed it. The proceeds from the robbery is a sunk cost (well in this case a profit). Your decision should be purely based on forward cash flows and outcome, you pay 100k or you do not and you take the risk to do jail time.
- cmdrfred 10y ago
  I never considered it that way but that makes sense.
- sjy 10y ago
  Whether you stole 1M or 10k makes a big difference to the expected utility of a 100k loss, which is obvious if you consider someone who doesn't actually have 100k left to spend on a fine.