Originally Posted by
jkearns
Somebody explain to me why we should discard the well established definition and application of "opportunity cost?"
Economists have studied this type of question for a long time and have pretty much come to consensus on it. This is a pure, straightforward, simple application of it.
We shouldn't discard the textbook definition of opportunity cost, which you defined reasonably well earlier:
The economic value of anything is the value of the highest thing or option you can exchange it for. I will readily grant that economic and accounting value are not identical.
However, there is an important fallacy in the way you attempt to apply the principle, specifically in how you define
value. You are assuming the value of a ticket is equal to its price (i.e. economic value = face value). This may be the case for you, however it is not the case for all individuals. Since an award ticket is not convertible into its face value in cash, the face value of the ticket is irrelevant in determining the value of the ticket to any particular individual. The exception is the case where that individual is willing to purchase the ticket at face value with cash, in which case (assuming he is a rational actor), we can assume that the "economic value" of the ticket is at least as much as the face value.