Season 5, Episode 8: James Ambler, owner of Paparazzi Proposals, values Lori Greiner’s help over Robert Herjavec’s and ultimately chooses to take less money for the same amount of equity in his company. Like any rational economic actor, he had to weigh the perceived costs and benefits of his decision, but it was not simply about dollars — he valued Lori’s input very highly. Even though he accepted less money, the entrepreneur still made a rational decision. Try pausing the clip before the entrepreneur makes his decision and ask students what they would do in this situation. Would they take the deal with Robert? Or would they reject him to have Lori on their team? Why would they make this choice? This provides an excellent basis for discussing subjective value, marginal thinking, and rational choices.
Rational Proposal
Tags: marginal thinking, rational choice, subjective value
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