Following the 2016 season, the San Francisco Giants signed pitcher Mark Melancon to a 4-year, $62 million contract. Melancon, who pitched poorly during 2017 and 2018, was still owed $28 million over the next two years, which the Giants would have to pay him even if they decided to release him to pursue potentially better pitchers. The Giants decided to keep Melancon on their roster. If the Giants decision to keep him was based on the $28 million still owed, economists would say that the Giants
Part 2
A.
were experiencing what is known as the endowment effect.
B.
were ignoring nonmonetary opportunity costs.
C.
were being realistic about their future behavior.
D.
committed the error of failing to ignore sunk costs.