sunk costs

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The Rational Fare Evader

Fare evading, i.e. not paying for the use of public transport, is a fairly significant issue for public transport providers. The Victorian Transport Authority has been tracking the estimated number of commuters who regularly fare evade and as you can see there is a sizeable portion who do this on a regular basis, ranging from roughly 5% to 20% of Victorian commuters (fig 1). There are potentially many causes for fare evading: I had the misfortune of forgetting to touch on to a crowded tram the other day which resulted in a discussion about these causes. This eventually led to the quip “if you get caught – just fare evade until you break even!”

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The Economics behind Pirating

With massive technological advances, it is safe to say that through growing ease of access we have all pirated copyright material such as music, TV shows, software or movies in one way or another.  Whether we have downloaded it ourselves through direct download sites and peer to peer networks, or perhaps received a copy from a friend or even used some other elaborate method to avoid paying for it, the logic of pirating is simple: why pay so much more for something that is readily accessible at near free of charge price.

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