Opportunity Cost Measure

An Opportunity Cost Measure is a predictive cost measure (for act X) based on the subtraction between the utility measures for act X and the next most beneficial act (opportunity).

AKA: Alternate-Cost, Economic Opportunity Loss.
Context:
- It can (often) be referenced by a Cost-Benefit Analysis,
Example(s):
- the opportunity cost of investing X dollars in Y instead of W is Z.
- …
Counter-Example(s):
- a Sunk Cost.
See: Comparative Advantage Relationship, Technical Debt, Scarcity, Production Possibilities Frontier.

References

(Wikipedia, 2016) ⇒ https://en.wikipedia.org/wiki/opportunity_cost Retrieved:2016-6-6.
- In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone where, given limited resources, a choice needs to be made between several mutually exclusive alternatives. Assuming the best choice is made, it is the "cost" incurred by not enjoying the benefit that would have been had by taking the second best available choice. The New Oxford American Dictionary defines it as "the loss of potential gain from other alternatives when one alternative is chosen." Opportunity cost is a key concept in economics, and has been described as expressing "the basic relationship between scarcity and choice." The notion of opportunity cost plays a crucial part in attempts to ensure that scarce resources are used efficiently. Thus, opportunity costs are not restricted to monetary or financial costs: the real cost of output forgone, lost time, pleasure or any other benefit that provides utility should also be considered opportunity costs.

(Kurzban et al., 2013) ⇒ Robert Kurzban, Angela Duckworth, Joseph W. Kable, and Justus Myers. (2013). “An Opportunity Cost Model of Subjective Effort and Task Performance." Behavioral and Brain Sciences 36, no. 06
- QUOTE: … Consequently, the deployment of these computational mechanisms carries an opportunity cost – that is, the next-best use to which these systems might be put. We argue that the phenomenology of effort can be understood as the felt output of these cost / benefit computations. In turn, the subjective experience of effort motivates reduced deployment of these computational mechanisms in the service of the present task. These opportunity cost representations, then, together with other cost / benefit calculations, determine effort expended and, everything else equal, result in performance reductions. ...

(WordNet, 2009) ⇒ http://wordnetweb.princeton.edu/perl/webwn?s=opportunity%20cost
- S: (n) opportunity cost (cost in terms of foregoing alternatives)
http://en.wiktionary.org/wiki/opportunity_cost#Noun
- (economics) The cost of an opportunity forgone (and the loss of the benefits that could be received from that opportunity); the most valuable forgone alternative.