Sunk Costs and Exploding Offers with Saul Levmore

In-person event only
1.0 CLE hours for in-person attendance

People tend to misunderstand the “sunk cost fallacy.” A firm invests in learning about a takeover target, and then hesitates to abandon the bidding or the search because it has sunk costs in this endeavor. When is this rational or irrational? Is it sensible to settle a case early before investing in litigation, or is the right price at which to settle the same in the middle of a trial? Is this the same as encouraging a kid to “follow your dream” when choosing a career? And what about hiring decisions? When should one make or accept an exploding offer with respect to a job – and is that the same when accepting a takeover bid?

In this lecture, Professor Saul Levmore (University of Chicago Law School) will explore the relationship between sunk costs and exploding offers in a variety of settings.


Bio: Saul Levmore came to the Law School from the University of Virginia. He was the Dean of the University of Chicago Law School from 2001 to 2009, and is the William B. Graham Distinguished Service Professor of Law. He has been a visiting professor at Yale, Harvard, Michigan, and Northwestern. He has taught and written about torts, corporations, copyright, non-profit organizations, comparative law, public choice, corporate tax, commercial law, insurance, and contracts. He is a member of the American Academy of Arts and Sciences, a past president of the American Law Deans Association, and a past trustee of the Law School Admissions Council and of the Skadden Foundation. He is currently the President of the American Law and Economics Association.
Aside from law, Levmore has been an advisor on corporate governance issues and on development strategies. Although his work continues to be related to law and economics (especially public choice) across many fields, he has also written books on aging and on games and puzzles.

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