The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne

Exercise 22

When does it make sense to give up?
(a) How long will you search for a $20 bill that you lost if you value your time at $5 an hour? Suppose you know that you lost it somewhere in your bedroom. Would it ever be rational for you to search more than four hours? Use the concepts of expected marginal benefit and expected marginal cost to explain how a rational person who values time at $5 an hour could search indefinitely for a lost $20 bill.
(b) A dispute between a tenant in a Manhattan apartment cooperative and the cooperative's board over who should pay the $909 cost of installing childproof window guards was taken to court in 1987. Seven years later, the dispute had not yet been resolved, but the lawyers' fees exceeded $100,000. Do you think this reflects stubborn stupidity? Under what circumstances could people rationally run up legal fees of more than $100,000 in trying to settle a $909 dispute?