This is an example of the endowment effect (fear of losing value that one perceives to already have), not sunk cost. Sunk cost would be if they continue the trial based on the amount of money they have already spent in fees, as opposed to the money they believe they can recoup later.
(Even that isn't necessarily sunk cost, because legal fees can be covered by the losing party in egregious cases, though that's unlikely here).
The retired corrections officer, Robert Fletcher, 62, said he bought the painting for $100 from a man named Pete Doige (spelled with an e), whom he met in 1975 in Thunder Bay, Ontario.
But that's beside the point. If it's worth $Xm, it can be used as collateral for a loan. And it's probably also insured for a certain amount.
> If it's worth $Xm, it can be used as collateral for a loan
It is worth only that much if it is authentic. The "if" is pretty big it seems.
Economically, there's little difference.
There's a difference economically, because the derivative of marginal utility with respect to income is (generally) negative. In other words, utility is concave with respect to the origin[0].
This makes a difference because, in many circumstances, people are more willing to insure against loss than they are to insure against gain.
It also makes difference legally, as well as financially, because assets can be used to collateralize loans, etc.
[0](That's the first derivative of marginal utility, which is the second derivative of the income-utility function).
Sure.. many economic models make this simplifying assumption. But each man defines his own utility functions, by their very nature.
Unless of course the original price they paid for the painting was millions of dollars. I doubt that, given they bought it off of a 17-year-old fresh out of prison.
By the time the case is over, they'll probably be in the negative. Pure sunk cost fallacy.