Why a risk-averse person might buy unfair insurance

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When Star Wars Episode III: Revenge of the Sith opened at 12:01 A.M., Thursday, May 19, 2005, the most fanatical Star Wars fans paid $50 million for tickets to stay up until 3:00 to 4:00 A.M. Businesses around the country, especially those tied to high-tech industries, suffered reduced productivity due to absent (suffering from Darth Vader flu) or groggy workers on Thursday and Friday. By one estimate, fan loyalty cost U.S. employers as much as $627 million (Josie Roberts, Pittsburgh Tribune-Review, May 19, 2005). Is this productivity loss an example of a negative externality? Explain.

Reference no: EM131403425

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